Exhibit 4.43
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RECEIVABLES PURCHASE AGREEMENT
dated as of February 6, 2001
among
KU RECEIVABLES LLC,
KENTUCKY UTILITIES COMPANY
as Servicer
THE VARIOUS PURCHASER GROUPS FROM TIME TO TIME PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION,
as Administrator
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TABLE OF CONTENTS
ARTICLE I. AMOUNTS AND TERMS OF THE PURCHASES 1
Section 1.1. Purchase Facility 1
Section 1.2. Making Purchases 2
Section 1.3. Purchased Interest Computation 4
Section 1.4. Settlement Procedures 4
Section 1.5. Fees 9
Section 1.6. Payments and Computations, Etc 9
Section 1.7. Increased Costs 10
Section 1.8. Requirements of Law 11
Section 1.9. Inability to Determine Euro-Rate 12
Section 1.10. Extension of Termination Date 13
ARTICLE II. REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS 14
Section 2.1. Representations and Warranties; Covenants 14
Section 2.2. Termination Events 14
ARTICLE III. INDEMNIFICATION 14
Section 3.1. Indemnities by the Seller 14
Section 3.2. Indemnities by the Servicer 15
ARTICLE IV. ADMINISTRATION AND COLLECTIONS 17
Section 4.1. Appointment of the Servicer 17
Section 4.2. Duties of the Servicer 18
Section 4.3. Lock-Box Account Arrangements 19
Section 4.4. Enforcement Rights 19
Section 4.5. Responsibilities of the Seller 20
Section 4.6. Servicing Fee 20
ARTICLE V. THE AGENTS 20
Section 5.1. Appointment and Authorization 20
Section 5.2. Delegation of Duties 22
Section 5.3. Exculpatory Provisions 22
Section 5.4. Reliance by Agents 22
Section 5.5. Notice of Termination Events 23
Section 5.6. Non-Reliance on Administrator, Purchaser Agents and Other
Purchasers 24
Section 5.7. Administrators and Affiliates 24
Section 5.8. Indemnification 24
Section 5.9. Successor Administrator 25
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ARTICLE VI. MISCELLANEOUS 25
Section 6.1. Amendments, Etc 25
Section 6.2. Notices, Etc 26
Section 6.3. Successors and Assigns; Participations; Assignments 26
Section 6.4. Costs, Expenses and Taxes 28
Section 6.5. No Proceedings; Limitation on Payments 29
Section 6.6. Confidentiality 29
Section 6.7. GOVERNING LAW AND JURISDICTION 29
Section 6.8. Execution in Counterparts 30
Section 6.9. Survival of Termination 30
Section 6.10. WAIVER OF JURY TRIAL 30
Section 6.11. Sharing of Recoveries 30
Section 6.12. Right of Setoff 30
Section 6.13. Entire Agreement 30
Section 6.14. Headings 31
Section 6.15. Purchaser Groups' Liabilities 31
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EXHIBIT I Definitions
EXHIBIT II Conditions of Purchases
EXHIBIT III Representations and Warranties
EXHIBIT IV Covenants
EXHIBIT V Termination Events
SCHEDULE I Credit and Collection Policy
SCHEDULE II Lock-Box Banks and Lock-Box Accounts
SCHEDULE III Trade Names
ANNEX A Form of Information Package
ANNEX B Form of Purchase Notice
ANNEX C List of Excluded Obligors
ANNEX D Form of Assumption Agreement
ANNEX E Form of Transfer Supplement
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This
RECEIVABLES PURCHASE AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Agreement") is entered into as of February 6,
2001, among KU RECEIVABLES LLC, a Delaware limited liability company, as seller
(the "Seller"), KENTUCKY UTILITIES COMPANY, a Kentucky and Virginia corporation
("KU"), as initial servicer (in such capacity, together with its successors and
permitted assigns in such capacity, the "Servicer"), PNC BANK, NATIONAL
ASSOCIATION, a national banking association ("PNC"), as purchaser agent for
Market Street Funding Corporation, and as Administrator for each Purchaser Group
(in such capacity, the "Administrator"), MARKET STREET FUNDING CORPORATION
("Market Street"), a Delaware corporation, as a Conduit Purchaser and as Related
Committed Purchaser, MELLON BANK, N.A., as purchaser agent for Three Rivers
Funding Corporation, THREE RIVERS FUNDING CORPORATION ("TRFCO"), a Delaware
corporation, as a Conduit Purchaser and as a Related Committed Purchaser, and
each of the other members of each Purchaser Group that become parties hereto by
executing an Assumption Agreement or a Transfer Supplement.
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in EXHIBIT I. References in the Exhibits
hereto to the "Agreement" refer to this Agreement, as amended, supplemented or
otherwise modified from time to time.
The Seller desires to sell, transfer and assign an undivided variable
percentage interest in a pool of receivables, and the Purchasers desire to
acquire such undivided variable percentage interest, as such percentage interest
shall be adjusted from time to time based upon, in part, reinvestment payments
that are made by such Purchasers.
In consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto agree as follows:
ARTICLE I.
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. PURCHASE FACILITY.
(a) On the terms and subject to the conditions hereof, the Seller may,
from time to time before the Facility Termination Date, request that the
Conduit Purchasers, or, only if a Conduit Purchaser denies such request or
is unable to fund (and provides notice of such denial or inability to the
Seller, the Administrator and its Purchaser Agent), request that the
Related Committed Purchasers, ratably make purchases of and reinvestments
in undivided percentage ownership interests with regard to the Purchased
Interest from the Seller from time to time from the date hereof to the
Facility Termination Date. Subject to SECTION 1.4(b), concerning
reinvestments, at no time will a Conduit Purchaser have any obligation to
make a purchase. Each Related Committed Purchaser severally hereby agrees,
on the terms and subject to the conditions hereof, to make purchases of
undivided percentage ownership interests with respect to the Purchased
Interest from the Seller before the
Purchaser Group Facility Termination Date for such Related Committed
Purchaser's Purchaser Group, based on the applicable Purchaser Group's
Ratable Share of each purchase requested pursuant to SECTION 1.2(a) (each a
"Purchase") (and, in the case of each Related Committed Purchaser, its
Commitment Percentage of its Purchaser Group's Ratable Share of such
Purchase) to the extent its Investment would not thereby exceed its
Commitment and the Aggregate Investment would not (after giving effect to
all Purchases on such date) exceed the Purchase Limit.
(b) The Seller may, upon 60 days' written notice to the Administrator
and each Purchaser Agent, reduce the unfunded portion of the Purchase Limit
in whole or in part (but not below the amount which would cause the Group
Investment of any Purchaser Group to exceed its Group Commitment (after
giving effect to such reduction)); provided that each partial reduction
shall be in the amount of at least $5,000,000, or an integral multiple of
$1,000,000 in excess thereof and unless terminated in whole, the Purchase
Limit shall in no event be reduced below $20,000,000. Such reduction shall
at the option of the Seller be applied either (i) to reduce ratably the
Group Commitment of each Purchaser Group or (ii) to terminate the Group
Commitment of any one Purchaser Group.
Section 1.2. MAKING PURCHASES.
(a) Each purchase (but not reinvestment) of undivided percentage
ownership interests with regard to the Purchased Interest hereunder shall
be made upon the Seller's irrevocable written notice in the form of ANNEX B
delivered to the Administrator and each Purchaser Agent in accordance with
SECTION 6.2 (which notice must be received by the Administrator and each
Purchaser Agent before 11:00 a.m.,
New York City time) at least three
Business Days before the requested Purchase Date, which notice shall
specify: (A) the amount requested to be paid to the Seller (such amount,
which shall not be less than $1,000,000, with respect to each Purchaser
Group, being the aggregate of the Investments of each Purchaser within such
Purchaser Group, relating to the undivided percentage ownership interest
then being purchased), (B) the date of such purchase (which shall be a
Business Day), and (C) a pro forma calculation of the Purchased Interest
after giving effect to the increase in the Aggregate Investment. Each
Purchaser Agent shall promptly notify each Purchaser in its Purchaser Group
of the requested Purchase. At its sole discretion, each Conduit Purchaser
may reject such Purchase by giving notice to the Purchaser Agent and the
Administrator, it being understood that if such Conduit Purchaser rejects
such Purchase, the Purchaser Agent for such Conduit Purchaser's Purchaser
Group shall thereafter promptly notify each Related Committed Purchaser in
its Purchaser Group of such rejection and of their obligations as a result
thereof to make a Purchase under this SECTION 1.2. If the Purchase is
requested from a Conduit Purchaser and such Conduit Purchaser determines,
in its sole discretion, to make the requested Purchase, such Conduit
Purchaser shall transfer to the Disbursement Account, an amount equal to
such Conduit Purchaser's Purchaser Group Ratable Share of such Purchase on
the requested Purchase Date by 3:00 p.m. (
New York
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time). If the Purchase is requested from the Related Committed
Purchasers for a Purchaser Group (in the case where the related Conduit
Purchaser determined not to or was unable to make such Purchase), subject
to the terms and conditions hereof, such Related Committed Purchasers for a
Purchaser Group shall transfer the applicable Purchaser Group's Ratable
Share of each Purchase (and, in the case of each Related Committed
Purchaser, its Commitment Percentage of its Purchaser Group's Ratable Share
of such Purchase) into the Disbursement Account by no later than 3:00 p.m.
(
New York time) on the Purchase Date.
(b) On or before 3:00 p.m. (
New York time) the date of each Purchase,
each Purchaser (or the related Purchaser Agent on its behalf), shall make
available to the Seller in same day funds, at PNC Bank, National
Association (Pittsburgh), account number #1011467831, ABA #▇▇▇-▇▇▇▇-▇▇ (the
"Disbursement Account"), an amount equal to the proceeds of such Purchase.
(c) Effective on the date of each Purchase pursuant to this SECTION
1.2 and each reinvestment pursuant to SECTION 1.4, the Seller hereby sells
and assigns to the Administrator for the benefit of the Purchasers
(ratably, according to each such Purchaser's Investment) an undivided
percentage ownership interest in: (i) each Pool Receivable then existing,
(ii) all Related Security with respect to such Pool Receivables, and (iii)
all Collections with respect to, and other proceeds of, such Pool
Receivables and Related Security.
(d) To secure all of the Seller's obligations (monetary or otherwise)
under this Agreement and the other Transaction Documents to which it is a
party, whether now or hereafter existing or arising, due or to become due,
direct or indirect, absolute or contingent, the Seller hereby grants to the
Administrator, for the benefit of the Purchasers, a security interest in
all of the Seller's right, title and interest (including any undivided
interest of the Seller) in, to and under all of the following, whether now
or hereafter owned, existing or arising: (i) all Pool Receivables, (ii) all
Related Security with respect to such Pool Receivables, (iii) all
Collections with respect to such Pool Receivables, (iv) the Lock-Box
Accounts and all amounts on deposit therein, and all certificates and
instruments, if any, from time to time evidencing such Lock-Box Accounts
and amounts on deposit therein, (v) all rights (but none of the
obligations) of the Seller under the Sale Agreement and (vi) all proceeds
of, and all amounts received or receivable under any or all of, the
foregoing (collectively, the "Pool Assets"). The Administrator, for the
benefit of the Purchasers, shall have, with respect to the Pool Assets, and
in addition to all the other rights and remedies available to the
Administrator and the Purchasers, all the rights and remedies of a secured
party under any applicable UCC.
(e) The Seller may, with the written consent of the Administrator and
each Purchaser Agent (which consent shall not be unreasonably withheld,
conditioned or delayed), add additional Persons as Purchasers (either to an
existing Purchaser Group or by creating new Purchaser Groups) or cause an
existing
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Purchaser to increase its Commitment, in each case automatically
increasing the Purchase Limit by the amount of the new or increased
Commitment; PROVIDED, HOWEVER, that the Commitment of any Purchaser may
only be increased with the consent of such Purchaser and at its sole
discretion. Each new Purchaser (or Purchaser Group) pursuant to this
SECTION 1.2(e) and each Purchaser increasing its Commitment pursuant to
this SECTION 1.2(e) shall become a party hereto or increase its Commitment,
as the case may be, by executing and delivering to the Administrator and
the Seller an Assumption Agreement in the form of ANNEX D hereto (which
Assumption Agreement shall, in the case of any new Purchaser or Purchasers,
be executed by each Person in such new Purchaser's Purchaser Group).
(f) Each Related Committed Purchaser's obligation hereunder shall be
several, such that the failure of any Related Committed Purchaser to make a
payment in connection with any purchase hereunder shall not relieve any
other Related Committed Purchaser of its obligation hereunder to make
payment for any Purchase. Further, in the event any Related Committed
Purchaser fails to satisfy its obligation to make a purchase as required
hereunder, upon receipt of notice of such failure from the Administrator
(or any relevant Purchaser Agent), subject to the limitations set forth
herein, the non-defaulting Related Committed Purchasers in such defaulting
Related Committed Purchaser's Purchaser Group shall purchase the defaulting
Related Committed Purchaser's Commitment Percentage of the related Purchase
PRO RATA in proportion to their relative Commitment Percentages (determined
without regard to the Commitment Percentage of the defaulting Related
Committed Purchaser; it being understood that a defaulting Related
Committed Purchaser's Commitment Percentage of any Purchase shall be first
put to the Related Committed Purchasers in such defaulting Related
Committed Purchaser's Purchaser Group and thereafter if there are no other
Related Committed Purchasers in such Purchaser Group or if such other
Related Committed Purchasers are also defaulting Related Committed
Purchasers, then such defaulting Related Committed Purchaser's Commitment
Percentage of such Purchase shall be put to each other Purchaser Group
ratably and applied in accordance with this paragraph (f)). Notwithstanding
anything in this paragraph (f) to the contrary, no Related Committed
Purchaser shall be required to make a Purchase pursuant to this paragraph
for an amount which would cause the aggregate Investment of such Related
Committed Purchaser (after giving effect to such Purchase) to exceed its
Commitment.
Section 1.3. PURCHASED INTEREST COMPUTATION. The Purchased Interest shall
be initially computed on the date of the initial Purchase hereunder. Thereafter,
until the Facility Termination Date, such Purchased Interest shall be
automatically recomputed (or deemed to be recomputed) on each Business Day other
than a Termination Day. From and after the occurrence of any Termination Day,
the Purchased Interest shall (until the event(s) giving rise to such Termination
Day are satisfied or are waived by the Administrator and the Majority
Purchasers) be deemed to be 100%. The Purchased Interest shall become zero when
the Aggregate Investment thereof and Aggregate Discount thereon shall have been
paid in full, all the amounts owed by the Seller and the Servicer hereunder to
each Purchaser, the
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Administrator and any other Indemnified Party or Affected Person are paid
in full, and the Servicer shall have received the accrued Servicing Fee thereon.
Section 1.4. SETTLEMENT PROCEDURES.
(a) The collection of the Pool Receivables shall be administered by
the Servicer in accordance with this Agreement. The Seller shall provide to
the Servicer on a timely basis all information needed for such
administration, including notice of the occurrence of any Termination Day
and current computations of the Purchased Interest.
(b) The Servicer shall, on each day on which Collections of Pool
Receivables are received (or deemed received) by the Seller or the
Servicer:
(i) hold in trust (and shall, at the request of the Administrator
(with the consent or at the direction of the Majority Purchasers),
segregate in a separate account approved by the Administrator if, at the
time of such request, there exists an Unmatured Termination Event or a
Termination Event or if the failure to so segregate reasonably could be
expected to cause an effect of the type described in clauses (b) through
(e) of the definition of Material Adverse Effect) for the benefit of each
Purchaser Group, out of such Collections, first, an amount equal to the
Aggregate Discount accrued through such day for each Portion of Investment
and not previously set aside, second, an amount equal to the Fees accrued
and unpaid through such day, third, an amount equal to the Increased Costs
accrued and unpaid through such day and fourth, to the extent funds are
available therefor, an amount equal to the aggregate of each Purchaser
Group's Ratable Share of the Servicing Fee accrued through such day and not
previously set aside.
(ii) subject to SECTION 1.4(f), if such day is not a Termination Day,
remit to the Seller, ratably, on behalf of each Purchaser Group, the
remainder of such Collections. Such remainder shall, to the extent
representing a return on the Aggregate Investment, ratably, according to
each Purchaser's Investment, be automatically reinvested in Pool
Receivables, and in the Related Security, Collections and other proceeds
with respect thereto; PROVIDED, HOWEVEr, that if the Purchased Interest
would exceed 100%, then the Servicer shall not reinvest, but shall set
aside and hold in trust for the benefit of the Purchasers (and shall, at
the request of the Administrator (with the consent or at the direction of
the Majority Purchasers), segregate in a separate account approved by the
Administrator if, at the time of such request, there exists an Unmatured
Termination Event or a Termination Event or if the failure to so segregate
reasonably could be expected to cause an effect of the type described in
clauses (b) through (e) of the definition of Material Adverse Effect) a
portion of such Collections that, together with the other Collections set
aside pursuant to this paragraph, shall equal the amount necessary to
reduce the Purchased Interest to 100%; PROVIDED, FURTHER, that (x) in the
case of any Purchaser that is a Conduit Purchaser (and is not also a
Related Committed Purchaser), if such
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Purchaser has provided notice (a "DECLINING NOTICE") to its Purchaser
Agent, the Administrator, the Seller and the Servicer that such Purchaser
(a "DECLINING CONDUIT PURCHASER") no longer wishes Collections with respect
to any Portion of Investment funded or maintained by such Purchaser to be
reinvested pursuant to this CLAUSE (II), and (y) in the case of any
Purchaser that has either (A) provided notice (an "EXITING NOTICE") to its
Purchaser Agent of its refusal, pursuant to SECTION 1.10, to extend its
Commitment hereunder or (B) for whom the Purchaser Group Facility
Termination Date for its Purchaser Group has occurred (in either case, an
"EXITING PURCHASER"), then in either case (x) or (y), above, such
Collections shall not be reinvested and shall instead be held in trust for
the benefit of such Purchaser and applied in accordance with CLAUSE (iii),
below,
(iii) if such day is a Termination Day (or any day following the
provision of a Declining Notice or an Exiting Notice or the occurrence of a
Purchaser Group Facility Termination Date), set aside and hold in trust
(and shall, at the request of the Administrator (with the consent or at the
direction of the Majority Purchasers), segregate in a separate account
approved by the Administrator) for the benefit of each Purchaser Group the
entire remainder of the Collections (or in the case of a Declining Conduit
Purchaser or an Exiting Purchaser an amount equal to such Purchaser's
ratable share of such Collections based on its Investment; provided, that
solely for the purpose of determining such Purchaser's ratable share of
such Collections, such Purchaser's Investment shall be deemed to remain
constant from the date of the provision of a Declining Notice or an Exiting
Notice, as the case may be, until the date such Purchaser's Investment has
been paid in full; IT BEING UNDERSTOOD that if such day is also a
Termination Day, such Declining Conduit Purchaser's or Exiting Purchaser's
Investment shall be recalculated taking into account amounts received by
such Purchaser in respect of this parenthetical and thereafter Collections
shall be set aside for such Purchaser ratably in respect of its Investment
(as recalculated)); PROVIDED, that if amounts are set aside and held in
trust on any Termination Day of the type described in clause (a) of the
definition of "Termination Day" (or any day following the provision of a
Declining Notice or an Exiting Notice or the occurrence of a Purchaser
Group Facility Termination Date) and, thereafter, the conditions set forth
in SECTION 2 of EXHIBIT II are satisfied or waived by the Administrator and
the Majority Purchasers (or in the case of a Declining Notice or an Exiting
Notice, such Declining Notice or Exiting Notice, as the case may be, has
been revoked by the related Declining Conduit Purchaser or Exiting
Purchaser, respectively and written notice thereof has been provided to the
Administrator, the Seller, the related Purchaser Agent and the Servicer),
such previously set-aside amounts shall, to the extent representing a
return on Aggregate Investment (or the Investment of the Declining Conduit
Purchaser or Exiting Purchaser, as the case may be) and ratably in
accordance with each Purchaser's Investment (or, in the case of a
revocation of a Declining Notice or an Exiting Notice, in accordance with
the Investment of such Declining Conduit Purchaser or Exiting Purchaser),
be reinvested in accordance with CLAUSE (ii) on the day of such subsequent
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satisfaction or waiver of conditions or revocation of Declining Notice
or Exiting Notice, as the case may be, and
(iv) release to the Seller (subject to SECTION 1.4(f)) for its own
account any Collections in excess of: (x) amounts required to be reinvested
in accordance with CLAUSE (ii) or the proviso to CLAUSE (iii) plus (y) the
amounts that are required to be set aside pursuant to CLAUSE (i), the first
or second proviso to CLAUSE (ii) and CLAUSE (iii) plus (z) the Seller's
Share of the Servicing Fee accrued and unpaid through such day.
(c) The Servicer shall, in accordance with the priorities set forth in
SECTION 1.4(d), below, deposit into each applicable Purchaser's account (or
such other account designated by such applicable Purchaser or its Purchaser
Agent), on each Settlement Date, Collections held for each Purchaser with
respect to such Purchaser's Portion(s) of Investment pursuant to CLAUSE
(b)(i) or (f) plus the amount of Collections then held for such Purchaser
pursuant to CLAUSES (b)(ii) and (iii) of SECTION 1.4; provided, that if KU
or an Affiliate thereof is the Servicer, such day is not a Termination Day
and the Administrator has not notified KU (or such Affiliate) that such
right is revoked, KU (or such Affiliate) may retain the portion of the
Collections set aside pursuant to CLAUSE (b)(i) that represents the
aggregate of each Purchaser Group's Ratable Share of the Servicing Fee. On
the last day of each Yield Period with respect to any Portion of
Investment, the applicable Purchaser Agent will notify the Servicer by
facsimile of the amount of the Discount accrued with respect to each such
Portion of Investment during the related Yield Period then ending.
(d) The Servicer shall distribute the amounts described (and at the
times set forth) in SECTION 1.4(c), as follows:
(i) if such distribution occurs on a day that is not a Termination Day
and the Purchased Interest does not exceed 100%, FIRST to each Purchaser
Agent ratably according to the Discount accrued during such Yield Period
(for the benefit of the relevant Purchasers within such Purchaser Agent's
Purchaser Group) in payment in full of all accrued Discount and Fees (other
than Servicing Fees) payable hereunder with respect to each Portion of
Investment maintained by the Purchasers within such Purchaser Agent's
Purchaser Group; IT BEING UNDERSTOOD that each Purchaser Agent shall
distribute such amounts to the Purchasers within its Purchaser Group
ratably according to the Discount, SECOND to the Administrator (for the
benefit of the relevant Affected Party(s)) in payment of any Increased
Costs claimed during such Yield Period and THIRD, if the Servicer has set
aside amounts in respect of the Servicing Fee pursuant to CLAUSE (b)(i) and
has not retained such amounts pursuant to CLAUSE (c), to the Servicer's own
account (payable in arrears on each Settlement Date) in payment in full of
the aggregate of each Purchaser Group's Ratable Share of accrued Servicing
Fees so set aside, and
(ii) if such distribution occurs on a Termination Day or on a day when
the Purchased Interest exceeds 100%, FIRST if KU or an Affiliate thereof is
not the
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Servicer, to the Servicer's own account in payment in full of all
accrued Servicing Fees, SECOND to each Purchaser Agent ratably according to
the Discount (for the benefit of the relevant Purchasers within such
Purchaser Agent's Purchaser Group) in payment in full of all accrued
Discount with respect to each Portion of Investment funded or maintained by
the Purchasers within such Purchaser Agent's Purchaser Group, THIRD to each
Purchaser Agent ratably according to the aggregate of the Investment of
each Purchaser in each such Purchaser Agent's Purchaser Group (for the
benefit of the relevant Purchasers within such Purchaser Agent's Purchaser
Group) in payment in full of each Purchaser's Investment (or, if such day
is not a Termination Day, the amount necessary to reduce the Purchased
Interest to 100%); IT BEING UNDERSTOOD that each Purchaser Agent shall
distribute the amounts described in the FIRST and SECOND clauses of this
SECTION 1.4(d)(ii) to the Purchasers within its Purchaser Group ratably
according to Discount and Investment, respectively, FOURTH, if the
Aggregate Investment and accrued Aggregate Discount with respect to each
Portion of Investment for all Purchaser Groups have been reduced to zero
(or, if such day is not a Termination Day, the amount necessary to reduce
the Purchased Interest to 100%), and all accrued Servicing Fees payable to
the Servicer (if other than KU or an Affiliate thereof) have been paid in
full, to each Purchaser Group ratably (for the benefit of the Purchasers
within such Purchaser Group) in accordance with its Ratable Share, the
Administrator and any other Indemnified Party or Affected Person in payment
in full of any other amounts (including Increased Costs) owed thereto by
the Seller or Servicer hereunder and, FIFTH, to the Servicer's own account
(if the Servicer is KU or an Affiliate thereof) in payment in full of the
Aggregate of each Purchaser Group's Ratable Share of all accrued Servicing
Fees.
After the Aggregate Investment, Aggregate Discount, fees payable pursuant to
each Purchaser Group Fee Letter and Servicing Fees with respect to the Purchased
Interest, and any other amounts payable by the Seller and the Servicer to each
Purchaser Group, the Administrator or any other Indemnified Party or Affected
Person hereunder, have been paid in full, all additional Collections with
respect to the Purchased Interest shall be paid to the Seller for its own
account.
(e) For the purposes of this SECTION 1.4:
(i) if on any day the Outstanding Balance of any Pool Receivable is
reduced or adjusted downward as a result of any defective, rejected,
returned, repossessed or foreclosed goods or services, or any revision,
cancellation, allowance, discount or other adjustment (except a setoff in
the ordinary course in connection with a Security Deposit or Obligor
Payment Plan or pursuant to the terms of an Energy Wholesale Contract) made
by the Seller or any Affiliate of the Seller, or the Servicer or any
Affiliate of the Servicer, or any setoff or dispute between the Seller or
any Affiliate of the Seller, or the Servicer or any Affiliate of the
Servicer and an Obligor, the Seller shall be deemed to have received on
such day a Collection of such Pool Receivable in the amount of such
reduction or downward adjustment; PROVIDED, HOWEVER that if the Servicer is
not the Originator or an Affiliate of Seller or the
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Originator, Seller shall not be deemed to have received collections
under this SECTION (e)(i) for any reduction or downward adjustment of a
Pool Receivable resulting solely from such Servicer's failure to comply
with applicable Legal Requirements;
(ii) if on any day any of the representations or warranties in SECTION
1(g) or (n) of EXHIBIT III is not true with respect to any Pool Receivable,
the Seller shall be deemed to have received on such day a Collection of
such Pool Receivable in full;
(iii) except as provided in CLAUSE (i) or (ii), or as otherwise
required by applicable Legal Requirements or the relevant Contract, all
Collections received from an Obligor of any Receivable shall be applied to
the Receivables of such Obligor in the order of the age of such
Receivables, starting with the oldest such Receivable, unless such Obligor
designates in writing its payment for application to specific Receivables;
and
(iv) if and to the extent the Administrator, any Purchaser Agent or
any Purchaser shall be required for any reason to pay over to an Obligor
(or any trustee, receiver, custodian or similar official in any Insolvency
Proceeding) any amount received by it hereunder, such amount shall be
deemed not to have been so received by such Person but rather to have been
retained by the Seller and, accordingly, such Person shall have a claim
against the Seller for such amount, payable when and to the extent that any
distribution from or on behalf of such Obligor is made in respect thereof.
(f) If at any time the Seller shall wish to cause the reduction of
Aggregate Investment (but not to commence the liquidation, or reduction to
zero, of the entire Aggregate Investment), the Seller may do so as follows:
(i) the Seller shall give the Administrator, each Purchaser Agent and
the Servicer (A) at least two Business Days' prior written notice thereof
for any reduction of Aggregate Investment less than or equal to $10,000,000
and (B) at least ten Business Days' prior written notice thereof for any
reduction of Aggregate Investment greater than $10,000,000 (in each case
such notice shall include the amount of such proposed reduction and the
proposed date on which such reduction will commence);
(ii) on the proposed date of commencement of such reduction and on
each day thereafter, the Servicer shall cause Collections not to be
reinvested until the amount thereof not so reinvested shall equal the
desired amount of reduction; and
(iii) the Servicer shall hold such Collections in trust for the
benefit of each Purchaser ratably according to its Investment, for payment
to each such Purchaser (or its related Purchaser Agent for the benefit of
such Purchaser) on the next Settlement Date with respect to any Portions of
Investment maintained by such Purchaser immediately following the related
current Yield Period, and the Aggregate
9
Investment (together with the Investment of any related Purchaser)
shall be deemed reduced in the amount to be paid to such Purchaser (or its
related Purchaser Agent for the benefit of such Purchaser) only when in
fact finally so paid;
PROVIDED THAT the amount of any such reduction shall be not less than $1,000,000
for each Purchaser Group and shall be an integral multiple of $500,000, and the
entire Aggregate Investment after giving effect to such reduction shall be not
less than $20,000,000 and shall be in an integral multiple of $1,000,000 (unless
the Aggregate Investment shall have been reduced to zero).
Section 1.5. FEES. The Seller shall pay to each Purchaser Agent for the
benefit of the related Purchasers certain fees in the amounts and on the dates
set forth in letters, dated the date hereof (each such letter, as amended,
supplemented, or otherwise modified from time to time, "a Purchaser Group Fee
Letter") in each case among the Seller, the Servicer, the Administrator and the
related Purchaser Agent.
Section 1.6. PAYMENTS AND COMPUTATIONS, ETC.
(a) All amounts to be paid to, or deposited with, any Affected Person
by the Seller, its Affiliates or the Servicer hereunder shall be made
without reduction for offset or counterclaim and shall be paid or deposited
no later than 1:00 p.m. (
New York City time) on the day when due in same
day funds to the applicable Purchaser's account (as such account is
identified in the related Purchaser Group Fee Letter). All amounts received
after 1:00 p.m. (
New York City time) will be deemed to have been received
on the next Business Day.
(b) The Seller or the Servicer, as the case may be, shall, to the
extent permitted by law, pay interest on any amount not paid to, or
deposited with, any Affected Person by the Seller, its Affiliates or the
Servicer, as the case may be, when due hereunder, at an interest rate equal
to 2.0% per annum above the Base Rate, payable on demand.
(c) All computations of interest under CLAUSE (b) and all computations
of Discount, fees and other amounts hereunder shall be made on the basis of
a year of 360 (or 365 or 366, as applicable, with respect to Discount or
other amounts calculated by reference to the Base Rate) days for the actual
number of days elapsed. Whenever any payment or deposit to be made
hereunder to any Affected Person shall be due on a day other than a
Business Day, such payment or deposit shall be made on the next Business
Day and such extension of time shall be included in the computation of such
payment or deposit.
Section 1.7. INCREASED COSTS.
(a) If any Purchaser Agent, Purchaser, Liquidity Provider, the
Administrator or any other Program Support Provider or any of their
respective
10
Affiliates (each an "Affected Person") reasonably determines that the
existence of or compliance with: (i) any law or regulation or any change
therein or in the interpretation or application thereof, in each case
adopted, issued or occurring after the date hereof, or (ii) any request,
guideline or directive from any central bank or other Governmental
Authority (whether or not having the force of law) issued or occurring
after the date of this Agreement, affects or would affect the amount of
capital required or expected to be maintained by such Affected Person, and
such Affected Person determines that the amount of such capital is
increased by or based upon the existence of any commitment to make
purchases of (or otherwise to maintain the investment in) Pool Receivables
related to this Agreement or any related liquidity facility, credit
enhancement facility or other commitments of the same type, then, upon
demand by such Affected Person (with a copy to the Administrator), the
Seller shall, pursuant to SECTION 1.4(d), pay to the Administrator, for the
account of such Affected Person, from time to time as specified by such
Affected Person, additional amounts sufficient to compensate such Affected
Person in the light of such circumstances as Increased Costs, to the extent
that such Affected Person reasonably determines such increase in capital to
be allocable to the existence of any of such commitments. A certificate as
to such amounts submitted to the Seller and the Administrator by such
Affected Person shall be conclusive and binding for all purposes, absent
manifest error.
(b) If, due to either: (i) the introduction of or any change in or in
the interpretation of any law or regulation, in each case adopted, issued
or occurring after the date of this Agreement or (ii) compliance with any
guideline or request from any central bank or other Governmental Authority
issued or occurring after the date of this Agreement (whether or not having
the force of law), there shall be any increase in the cost to any Affected
Person of agreeing to purchase or purchasing, or maintaining the ownership
of, the Purchased Interest or any portion thereof in respect of which
Discount is computed by reference to the Euro-Rate, then upon demand by
such Affected Person, the Seller shall, pursuant to SECTION 1.4(d) pay to
the Administrator (for the account of such Affected Person), from time to
time as specified by such Affected Person, additional amounts sufficient to
compensate such Affected Person for such increased costs as Increased
Costs. Such Affected Person shall provide notice to the Seller of its claim
to such amounts setting forth in reasonable detail the basis for such
determination.
(c) If such increased costs affect the related Affected Person's
portfolio of financing transactions, such Affected Person shall use
reasonable averaging and attribution methods to allocate such increased
costs to the transactions contemplated by this Agreement
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Section 1.8. REQUIREMENTS OF LAW.
(a) If any Affected Person reasonably determines that the existence of or
compliance with: (i) any law or regulation or any change therein or in the
interpretation or application thereof, in each case adopted, issued or occurring
after the date hereof, or (ii) any request, guideline or directive from any
central bank or other Governmental Authority (whether or not having the force of
law) issued or occurring after the date of this Agreement:
(A) does or shall subject such Affected Person to any tax of any kind
whatsoever with respect to this Agreement, any increase in the Purchased
Interest or any portion thereof or in the amount of such Person's
Investment relating thereto, or does or shall change the basis of taxation
of payments to such Affected Person on account of Collections, Discount or
any other amounts payable hereunder (excluding taxes imposed on the overall
pre-tax net income of such Affected Person, and franchise taxes imposed on
such Affected Person, by the jurisdiction under the laws of which such
Affected Person is organized or otherwise is considered doing business
(unless the Affected Person would not be considered doing business in such
jurisdiction, but for having entered into, or engaged in the transactions
in connection with, this Agreement or any other Transaction Document) or a
political subdivision thereof),
(B) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, or deposits or other liabilities in or for the account of, purchases,
advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of such Affected Person that are not otherwise
included in the determination of the Euro-Rate or the Base Rate hereunder,
or
(C) does or shall impose on such Affected Person any other condition,
and the result of any of the foregoing is: (A) to increase the cost to such
Affected Person of acting as Administrator or as a Purchaser Agent, or of
agreeing to purchase or purchasing or maintaining the ownership of undivided
percentage ownership interests with regard to the Purchased Interest (or
interests therein) or any Portion of Investment, or (B) to reduce any amount
receivable hereunder (whether directly or indirectly), then, in any such case,
upon demand by such Affected Person, the Seller shall, pursuant to SECTION
1.4(d), pay to such Affected Person additional amounts necessary to compensate
such Affected Person for such additional cost or reduced amount receivable as
Increased Costs. All such amounts shall be payable as incurred. A certificate
from such Affected Person to the Seller and the Administrator certifying, in
reasonably specific detail, the basis for, calculation of, and amount of such
additional costs or reduced amount receivable shall be conclusive and binding
for all purposes, absent manifest error; PROVIDED, HOWEVER, that no Affected
Person shall be required to disclose any confidential or tax planning
information in any such certificate.
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(b) Notwithstanding any other provision of SECTION 1.7 or this SECTION 1.8,
the amounts paid by the Seller as Increased Costs under such Sections on any
Settlement Date shall be settled by deduction from the Total Reserves in effect
on such Settlement Date (as set forth on the related Information Package) and
shall in no case exceed the amount of such reserve (after giving effect to all
other deductions applicable) on such Settlement Date. The Seller shall have no
obligation to compensate for any shortfall in payments due to the operation of
this Section 1.8(b) on such Settlement Date on any future Settlement Date, and
any deduction under this Section 1.8(b) applicable to such Settlement Date shall
not apply to future Settlement Dates.
Section 1.9. INABILITY TO DETERMINE EURO-RATE. (a) If the Administrator (or
any Purchaser Agent) determines before the first day of any Yield Period (which
determination shall be final and conclusive) that, by reason of circumstances
affecting the interbank eurodollar market generally, deposits in dollars (in the
relevant amounts for such Yield Period) are not being offered to banks in the
interbank eurodollar market for such Yield Period, or adequate means do not
exist for ascertaining the Euro-Rate for such Yield Period, then the
Administrator shall give notice thereof to the Seller. Thereafter, until the
Administrator or such Purchaser Agent notifies the Seller that the circumstances
giving rise to such suspension no longer exist, (a) no Portion of Investment
shall be funded at the Yield Rate determined by reference to the Euro-Rate and
(b) the Discount for any outstanding Portions of Investment then funded at the
Yield Rate determined by reference to the Euro-Rate shall, on the last day of
the then current Yield Period, be converted to the Yield Rate determined by
reference to the Base Rate.
(b) If, on or before the first day of any Yield Period, the Administrator
shall have been notified by any Purchaser, Purchaser Agent or Liquidity Provider
that, such Person has determined (which determination shall be final and
conclusive) that, any enactment, promulgation or adoption of or any change in
any applicable law, rule or regulation, or any change in the interpretation or
administration thereof by a governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Person with any guideline, request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency shall
make it unlawful or impossible for such Person to fund or maintain any Portion
of Investment at the Yield Rate determined by reference to the Euro-Rate, the
Administrator shall notify the Seller thereof. Upon receipt of such notice,
until the Administrator notifies the Seller that the circumstances giving rise
to such determination no longer apply, (a) no Portion of Investment shall be
funded at the Yield Rate determined by reference to the Euro-Rate and (b) the
Discount for any outstanding Portions of Investment then funded at the Yield
Rate determined by reference to the Euro-Rate shall be converted to the Yield
Rate determined by reference to the Base Rate either (i) on the last day of the
then current Yield Period if such Person may lawfully continue to maintain such
Portion of Investment at the Yield Rate determined by reference to the Euro-Rate
to such day, or (ii) immediately, if such Person may not lawfully continue to
maintain such Portion of Investment at the Yield Rate determined by reference to
the Euro-Rate to such day.
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Section 1.10. EXTENSION OF TERMINATION DATE. The Seller may advise the
Administrator and each Purchaser Agent in writing of its desire to extend the
Facility Termination Date for an additional 364 days, provided such request is
made not more than 90 days prior to, and not less than 60 days prior to, the
then current Facility Termination Date. In the event that the Purchasers are all
agreeable to such extension, the Administrator shall so notify the Seller in
writing (it being understood that the Purchasers may accept or decline such a
request in their sole discretion and on such terms as they may elect) not less
than 30 days prior to the then current Facility Termination Date and the Seller,
the Administrator, the Purchaser Agents and the Purchasers shall enter into such
documents as the Purchasers may deem necessary or appropriate to reflect such
extension, and all reasonable costs and expenses incurred by the Purchasers, the
Administrator and the Purchaser Agents in connection therewith (including
reasonable Attorneys' Costs) shall be paid by the Seller. In the event a
Purchaser declines the request for such extension, the Administrator shall so
notify each Purchaser Agent and the Seller of such determination; PROVIDED,
HOWEVER, that the failure of the Administrator to notify the Seller of the
determination to decline such extension shall not affect the understanding and
agreement that the Purchaser[s] shall be deemed to have refused to grant the
requested extension in the event the Administrator fails to affirmatively notify
the Seller, in writing, of their agreement to accept the requested extension.
Each other Purchaser who shall have previously assented to the renewal may,
within two Business Days of the receipt of such notice, opt to revoke its
renewal under this paragraph by written notice to the Administrator, each other
Purchaser and the Seller (it being understood that upon the expiration of such
two Business Days, each Purchaser who shall have delivered notice of its refusal
to renew or shall have so revoked a previously declared renewal shall be an
Exiting Purchaser for all purposes of this Agreement, including SECTION 1.4(b)).
Thereafter, each such Purchaser's Commitment shall terminate, the Purchase Limit
shall be reduced by the aggregate of the Commitments of the Exiting Purchasers
under this paragraph (unless there shall be a corresponding increase in
Commitments pursuant to SECTION 1.2(e)), and each such Purchaser (and in the
case of a termination pursuant to this paragraph of the Commitments of an entire
Purchaser Group, the related Purchaser Agent) shall have no further rights or
obligations hereunder (except for (i) its rights to continue to receive payments
hereunder with respect to Investment, Discount and Fees in connection with its
Investment in the Purchased Interest, (ii) its rights to receive any other
amounts owing to such Purchaser as an Indemnified Party or Affected Person,
(iii) any voting rights that such Purchaser may have with respect to any
Lock-Box Account and the related Lock-Box Agreement and (iv) any other rights
that expressly survive termination, in each case until all payments owed to such
Purchaser hereunder have been paid in full).
ARTICLE II.
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the Seller,
KU and the Servicer hereby makes the representations and warranties, and hereby
agrees to perform and observe the covenants, applicable to it set forth in
EXHIBITS III and IV, respectively.
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Section 2.2. TERMINATION EVENTS. If any of the Termination Events set forth
in EXHIBIT V shall occur, the Administrator may (with the consent of the
Majority Purchasers) or shall (at the direction of the Majority Purchasers), by
notice to the Seller, declare the Facility Termination Date to have occurred (in
which case the Facility Termination Date shall be deemed to have occurred);
PROVIDED, that automatically upon the occurrence of any event (without any
requirement for the passage of time or the giving of notice) described in
PARAGRAPH (f) of EXHIBIT V, the Facility Termination Date shall occur. Upon any
such declaration, occurrence or deemed occurrence of the Facility Termination
Date, the Administrator, each Purchaser Agent and each Purchaser shall have, in
addition to the rights and remedies that they may have under this Agreement, all
other rights and remedies provided after default under the
New York UCC and
under other applicable law, which rights and remedies shall be cumulative.
ARTICLE III.
INDEMNIFICATION
Section 3.1. INDEMNITIES BY THE SELLER. Without limiting any other rights
that the any Purchaser Agent, Purchaser, Liquidity Provider, the Administrator
or any Program Support Provider or any of their respective Affiliates,
employees, officers, directors, agents, counsel, successors, transferees or
assigns (each, an "Indemnified Party") may have hereunder or under applicable
law, the Seller hereby agrees to indemnify each Indemnified Party from and
against any and all claims, damages, expenses, costs, losses and liabilities
(including Attorney Costs) (all of the foregoing being collectively referred to
as "Indemnified Amounts") arising out of or resulting from this Agreement
(whether directly or indirectly), the use of proceeds of purchases or
reinvestments, the ownership of the Purchased Interest, or any interest therein,
or in respect of any Receivable, Related Security or Contract, excluding,
however: (a) Indemnified Amounts to the extent resulting from gross negligence
or willful misconduct on the part of such Indemnified Party or its officers,
directors, agents or counsel, (b) recourse with respect to any Receivable to the
extent that such Receivable is uncollectible in whole or part on account of the
insolvency, bankruptcy or lack of credit worthiness of the related Obligor or
any Insolvency Proceeding in respect to an Obligor, or (c) any overall net
income taxes or franchise taxes imposed on such Indemnified Party by the
jurisdiction under the laws of which such Indemnified Party is organized or
otherwise is considered doing business (unless the Indemnified Party would not
be considered doing business in such jurisdiction, but for having entered into,
or engaged in the transactions in connection with, this Agreement or any other
Transaction Document) or any political subdivision thereof. Without limiting or
being limited by the foregoing, and subject to the exclusions set forth in the
preceding sentence, the Seller shall pay on demand (which demand shall be
accompanied by documentation of the Indemnified Amounts, in reasonable detail)
to each Indemnified Party any and all amounts necessary to indemnify such
Indemnified Party from and against any and all Indemnified Amounts relating to
or resulting from any of the following:
15
(i) the failure of any Receivable included in the calculation
of the Net Receivables Pool Balance as an Eligible Receivable to be an
Eligible Receivable, the failure of any information contained in an
Information Package to be true and correct, or the failure of any
other information provided to such Indemnified Party by the Seller,
Originator or any Affiliate thereof with respect to Receivables or
this Agreement to be true and correct,
(ii) the failure of any representation, warranty or statement
made or deemed made by the Seller (or any of its officers) under or in
connection with this Agreement to have been true and correct as of the
date made or deemed made in all respects,
(iii) the failure by the Seller to comply with any applicable
Legal Requirement with respect to any Pool Receivable or the related
Contract or applicable Legal Requirement under which any Pool
Receivable arises or the failure of any Pool Receivable or the related
Contract to conform to any such applicable Legal Requirement,
(iv) the failure to vest in the Administrator (for the benefit
of the Purchasers) a valid and enforceable: (A) perfected undivided
percentage ownership interest, to the extent of the Purchased
Interest, in the Receivables in, or purporting to be in, the
Receivables Pool and the other Pool Assets, or (B) first priority
perfected security interest in the Pool Assets, in each case, free and
clear of any Adverse Claim,
(v) the failure, to the extent resulting from an action or
inaction of Seller, Originator or any Affiliate thereof, to have
filed, or any delay in filing, financing statements or other similar
instruments or documents under the UCC of any applicable jurisdiction
or other applicable laws with respect to any Receivables in, or
purporting to be in, the Receivables Pool and the other Pool Assets,
whether at the time of any purchase or reinvestment or at any
subsequent time,
(vi) any dispute, claim, offset or defense (other than any
reduction, revision or discharge in any Insolvency Proceeding relating
to the Obligor) of the Obligor to the payment of any Receivable in, or
purporting to be in, the Receivables Pool (including a defense not
related to an Insolvency Event based on such Receivable or the related
Contract or applicable Legal Requirement not being a legal, valid and
binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale
of the goods or services related to such Receivable or the furnishing
or failure to furnish such goods or services or relating to collection
activities by the Seller or any of its Affiliates with respect to such
Receivable,
(vii) any failure of the Seller, Originator or any Affiliate
thereof to perform its duties or obligations in accordance with the
provisions hereof or under the Contracts or the applicable Legal
Requirements,
16
(viii) any products liability or other claim, investigation,
litigation or proceeding arising out of or in connection with
merchandise, insurance or services that give rise to any Receivable,
(ix) the commingling of Collections by Seller, Originator or
any Affiliate thereof at any time with other funds,
(x) the use of proceeds of purchases or reinvestments,
(xi) any reduction in the Aggregate Investment as a result of
the distribution of Collections pursuant to SECTION 1.4(D), if all or
a portion of such distributions shall thereafter be rescinded or
otherwise must be returned for any reason, or
(xii) any obligation or liability of any Indemnified Party to
any Obligor or any other third Person with respect to any Receivables,
Contracts or applicable Legal Requirements related thereto, other than
any obligation or liability resulting from the Servicer (if the
Servicer is not the Originator or an Affiliate of the Originator)
failing to comply with Applicable Legal Requirements, or any
obligation of any Indemnified Party to perform any of the obligations
of the Seller or the Originator with respect to any Receivables,
Contracts or applicable Legal Requirements related thereto.
Section 3.2. INDEMNITIES BY THE SERVICER. Without limiting any other rights
that any Indemnified Party may have hereunder or under applicable law, the
Servicer hereby agrees to indemnify each Indemnified Party from and against any
and all Indemnified Amounts arising out of or resulting from (whether directly
or indirectly): (a) the failure of any information contained in an Information
Package to be true and correct, or the failure of any other information provided
to such Indemnified Party by, or on behalf of, the Servicer to be true and
correct, (b) the failure of any representation, warranty or statement made or
deemed made by the Servicer (or any of its officers) under or in connection with
this Agreement or any other Transaction Document to which it is a party to have
been true and correct as of the date made or deemed made in all respects when
made, (c) the failure by the Servicer to comply with any applicable Legal
Requirements with respect to any Pool Receivable or the related Contract, (d)
any dispute, claim, offset or defense of the Obligor to the payment of any
Receivable in, or purporting to be in, the Receivables Pool resulting from or
related to the collection activities by the Servicer or its Affiliates with
respect to such Receivable, or (e) any failure of the Servicer to perform its
duties or obligations in accordance with the provisions hereof or any other
Transaction Document to which it is a party; PROVIDED THAT in each case such
Indemnified Amounts arise out of, result from or relate to acts or omissions of
such Servicer prior to the appointment of a successor to such Servicer pursuant
to SECTION 4.1(C).
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ARTICLE IV.
ADMINISTRATION AND COLLECTIONS
Section 4.1. APPOINTMENT OF THE SERVICER.
(a) The servicing, administering and collection of the Pool
Receivables shall be conducted by the Person so designated from time to
time as the Servicer in accordance with this Section. Until the
Administrator gives notice to KU (in accordance with this SECTION 4.1) of
the designation of a new Servicer, KU is hereby designated as, and hereby
agrees to perform the duties and obligations of, the Servicer pursuant to
the terms hereof. Upon the occurrence of a Termination Event, the
Administrator may (with the consent of the Majority Purchasers) or shall
(at the direction of the Majority Purchasers) designate as Servicer any
Person (including itself) to succeed KU or any successor Servicer, on the
condition in each case that any such Person so designated shall agree to
perform the duties and obligations of the Servicer pursuant to the terms
hereof.
(b) Upon the designation of a successor Servicer as set forth in
CLAUSE (a), KU agrees that it will terminate its activities as Servicer
hereunder in any reasonable manner that the Administrator determines will
facilitate the transition of the performance of such activities to the new
Servicer, and KU shall cooperate with, and assist in the transfer of such
servicing duties to, such new Servicer. Such cooperation shall include
access to and transfer of related records (including all Contracts) and,
subject to restrictions in applicable contracts and agreements, use by the
new Servicer of all licenses, hardware or software necessary or desirable
to collect the Pool Receivables and the Related Security.
(c) KU acknowledges that, in making their decision to execute and
deliver this Agreement, the Administrator and each Purchaser Group have
relied on KU's agreement to act as Servicer hereunder. Accordingly, KU
agrees that it will not voluntarily resign as Servicer.
(d) The Servicer may delegate its duties and obligations hereunder to
the Sub-Servicer; PROVIDED, that, in such delegation: (i) the Sub-Servicer
shall agree in writing to perform the duties and obligations of the
Servicer pursuant to the terms hereof, (ii) the Servicer shall remain
primarily liable for the performance of the duties and obligations so
delegated, (iii) the Seller, the Administrator and each Purchaser Group
shall have the right to look solely to the Servicer for performance, and
(iv) the terms of any agreement with the Sub-Servicer shall provide that
the Administrator may terminate such agreement upon the termination of the
Servicer hereunder by giving notice of its desire to terminate such
agreement to the Servicer (and the Servicer shall provide appropriate
notice to the Sub-Servicer); PROVIDED, HOWEVER, that if any such delegation
is to any Person other than the Originator or an Affiliate
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thereof, the Administrator and the Majority Purchasers shall have consented
in writing in advance to such delegation.
Section 4.2. DUTIES OF THE SERVICER.
(a) The Servicer shall take or cause to be taken all such action as
may be necessary or advisable to administer and collect each Pool
Receivable from time to time, all in accordance with this Agreement and all
applicable Legal Requirements, with reasonable care and diligence, and in
accordance with the Credit and Collection Policies. The Servicer shall set
aside, for the account of each Purchaser Group, the amount of the
Collections to which each such Purchaser Group is entitled in accordance
with ARTICLE I. The Servicer may, in accordance with the applicable Credit
and Collection Policy and applicable Legal Requirements, extend the
maturity of any Pool Receivable (but not beyond 30 days) and extend the
maturity or adjust the Outstanding Balance of any Defaulted Receivable as
the Servicer may determine to be appropriate to maximize Collections
thereof; PROVIDED, HOWEVER, that: (i) such extension or adjustment shall
not alter the status of such Pool Receivable as a Delinquent Receivable or
a Defaulted Receivable or limit the rights of the Administrator or any
Purchaser Group under this Agreement and (ii) if a Termination Event has
occurred and KU or an Affiliate thereof is serving as the Servicer, KU or
such Affiliate may only make such extensions or adjustments if (A) required
to do so by applicable Legal Requirements or (B) the Outstanding Principal
Balance of the Receivable adjusted or extended shall be less than $250 and
the aggregate Outstanding Principal Balance of all Receivables so adjusted
or extended up to such time does not exceed $10,000 or (C) upon the prior
approval of the Administrator. The Seller shall deliver to the Servicer and
the Servicer shall hold for the benefit of the Seller and the Administrator
(individually and for the benefit of each Purchaser Group), in accordance
with their respective interests, all records and documents (including
computer tapes or disks) with respect to each Pool Receivable.
Notwithstanding anything to the contrary contained herein, the
Administrator may direct the Servicer (whether the Servicer is KU or any
other Person) to commence or settle any legal action to enforce collection
of any Pool Receivable or to foreclose upon or repossess any Related
Security to the extent in compliance with applicable Legal Requirements;
PROVIDED, HOWEVER, that no such direction may be given unless either: (A) a
Termination Event has occurred or (B) the Administrator believes in good
faith that failure to commence, settle or effect such legal action,
foreclosure or repossession could adversely affect Receivables constituting
a material portion of the Pool Receivables.
(b) The Servicer shall, as soon as practicable following actual
receipt of collected funds, turn over to the Seller the collections of any
indebtedness that is not a Pool Receivable, less, if KU or an Affiliate
thereof is not the Servicer, all reasonable and appropriate out-of-pocket
costs and expenses of such Servicer of servicing, collecting and
administering such collections. The Servicer, if other than KU or an
Affiliate thereof, shall, as soon as practicable upon demand, deliver to
the
19
Seller all records in its possession that evidence or relate to any
indebtedness that is not a Pool Receivable, and copies of records in
its possession that evidence or relate to any indebtedness that is a
Pool Receivable.
(c) The Servicer's obligations hereunder shall terminate on the later
of: (i) the Facility Termination Date and (ii) the date on which all
amounts required to be paid to the Purchaser Agents, each Purchaser, the
Administrator and any other Indemnified Party or Affected Person hereunder
shall have been paid in full.
After such termination, if KU or an Affiliate thereof was not the Servicer
on the date of such termination, the Servicer shall promptly deliver to the
Seller all books, records and related materials that the Seller previously
provided to the Servicer, or that have been obtained by the Servicer, in
connection with this Agreement.
Section 4.3. LOCK-BOX ACCOUNT ARRANGEMENTS. Upon the occurrence of a
Termination Event, the Administrator may (with the consent of the Majority
Purchasers) or shall (upon the direction of the Majority Purchasers) at any time
thereafter give notice to each Lock-Box Bank that the Administrator is
exercising its rights under the Lock-Box Agreements to do any or all of the
following: (a) to have the exclusive ownership and control of the Lock-Box
Accounts or the KU Post-Office Box (as appropriate) transferred to the
Administrator (for the benefit of the Purchasers) and to exercise exclusive
dominion and control over the funds deposited therein, (b) to have the proceeds
that are sent to the respective Lock-Box Accounts, to the KU Post-Office Box or
to Travelers redirected pursuant to the Administrator's instructions rather than
deposited in the applicable Lock-Box Account, and (c) to take any or all other
actions permitted under the applicable Lock-Box Agreement. The Seller hereby
agrees that if the Administrator at any time takes any action set forth in the
preceding sentence, the Administrator shall have exclusive control (for the
benefit of the Purchasers) of the proceeds (including Collections) of all Pool
Receivables and the Seller hereby further agrees to take any other action that
the Administrator or any Purchaser Agent may reasonably request to transfer such
control. Any proceeds of Pool Receivables received by the Seller or the Servicer
thereafter shall be sent immediately to the Administrator. The parties hereto
hereby acknowledge that at any time the Administrator takes control of any
Lock-Box Account, the Administrator shall not have any rights to the funds
therein in excess of the unpaid amounts due to the Administrator, the Purchaser
Groups, any Indemnified Party or any other Person hereunder, and the
Administrator shall distribute or cause to be distributed such funds in
accordance with SECTION 4.2(b) and ARTICLE I (in each case as if such funds were
held by the Servicer thereunder).
Section 4.4. ENFORCEMENT RIGHTS.
(a) At any time following the occurrence of a Termination Event:
(i) the Administrator may (with the consent or at the direction of the
Majority Purchasers) direct the Obligors that payment of all amounts
payable under any Pool Receivable is to be made directly to the
Administrator or its designee,
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(ii) the Administrator may (with the consent or at the direction of
the Majority Purchasers) instruct the Seller or the Servicer to give notice
of the Purchaser Groups' interest in Pool Receivables to each Obligor,
which notice shall direct that payments be made directly to the
Administrator or its designee (on behalf of such Purchaser Groups), and the
Seller or the Servicer, as the case may be, shall give such notice at the
expense of the Seller or the Servicer, as the case may be; PROVIDED, that
if the Seller or the Servicer, as the case may be, fails to so notify each
Obligor, the Administrator (at the Seller's or the Servicer's, as the case
may be, expense) may so notify the Obligors, and
(iii) the Administrator may (with the consent or at the direction of
the Majority Purchasers) request the Servicer to, and upon such request the
Servicer shall: (A) assemble all of the records necessary or desirable to
collect the Pool Receivables and the Related Security, and transfer or
license to a successor Servicer, to the extent allowed by the Servicer's
agreement(s) with the vendor(s) of such software, the use of all software
necessary or desirable to collect the Pool Receivables and the Related
Security, and make the same available to the Administrator or its designee
(for the benefit of the Purchasers) at a place selected by the
Administrator, and (B) segregate all cash, checks and other instruments
received by it from time to time constituting Collections in a manner
acceptable to the Administrator and, promptly upon receipt, remit all such
cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Administrator or its designee.
(b) The Seller hereby authorizes the Administrator (on behalf of each
Purchaser Group), and irrevocably appoints the Administrator as its
attorney-in-fact with full power of substitution and with full authority in
the place and stead of the Seller, which appointment is coupled with an
interest, to take any and all steps in the name of the Seller and on behalf
of the Seller necessary or desirable, in the determination of the
Administrator, after the occurrence of a Termination Event, to collect any
and all amounts or portions thereof due under any and all Pool Assets,
including endorsing the name of the Seller on checks and other instruments
representing Collections and enforcing such Pool Assets. Notwithstanding
anything to the contrary contained in this subsection, none of the powers
conferred upon such attorney-in-fact pursuant to the preceding sentence
shall subject such attorney-in-fact to any liability if any action taken by
it shall prove to be inadequate or invalid, nor shall they confer any
obligations upon such attorney-in-fact in any manner whatsoever.
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Section 4.5. RESPONSIBILITIES OF THE SELLER.
(a) Anything herein to the contrary notwithstanding, the Seller shall:
(i) perform all of its obligations, if any, under the Contracts or
applicable Legal Requirements related to the Pool Receivables to the same
extent as if interests in such Pool Receivables had not been transferred
hereunder, and the exercise by the Administrator, the Purchaser Agents or
the Purchasers of their respective rights hereunder shall not relieve the
Seller from such obligations, and (ii) pay when due any taxes, including
any sales taxes payable in connection with the Pool Receivables and their
creation and satisfaction. The Administrator, the Purchaser Agents or any
of the Purchasers shall not have any obligation or liability with respect
to any Pool Asset, nor shall any of them be obligated to perform any of the
obligations of the Seller, Servicer or the Originator thereunder.
(b) KU hereby irrevocably agrees that if at any time it shall cease to
be the Servicer hereunder, it shall act (if the then-current Servicer so
requests and at such Servicer's sole expense) as the data-processing agent
of the Servicer and, in such capacity, KU shall conduct the data-processing
functions of the administration of the Receivables and the Collections
thereon in substantially the same way that KU conducted such
data-processing functions while it acted as the Servicer.
Section 4.6. SERVICING FEE. (a) Subject to CLAUSE (b), the Servicer shall
be paid a fee (the "Servicing Fee") equal to 0.50% (the "Servicing Fee Rate")
PER ANNUM of the daily average aggregate Outstanding Balance of the Pool
Receivables. The aggregate of each Purchaser Group's Ratable Share of such fee
shall be paid through the distributions contemplated by SECTION 1.4(d), and the
Seller's Share of such fee shall be paid by the Seller.
(b) If the Servicer ceases to be KU or an Affiliate thereof, the servicing
fee shall be the greater of: (i) the amount calculated pursuant to CLAUSE (a)
and (ii) an alternative amount specified by the successor Servicer not to exceed
110% of the aggregate reasonable costs and expenses incurred by such successor
Servicer in connection with the performance of its obligations as Servicer.
ARTICLE V.
THE AGENTS
Section 5.1. APPOINTMENT AND AUTHORIZATION. (a) Each Purchaser and
Purchaser Agent hereby irrevocably designates and appoints PNC Bank, National
Association as the "Administrator" hereunder and authorizes the Administrator to
take such actions and to exercise such powers as are delegated to the
Administrator hereby and to exercise such other powers as are reasonably
incidental thereto. The Administrator shall hold, in its name, for the benefit
of each Purchaser, ratably, the Purchased Interest. The Administrator shall not
have any duties other than those expressly set forth herein or any fiduciary
relationship with any Purchaser or Purchaser Agent, and no implied obligations
or liabilities shall be read into this Agreement, or otherwise exist, against
the Administrator. The Administrator does not
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assume, nor shall it be deemed to have assumed, any obligation to, or
relationship of trust or agency with, the Seller or Servicer. Notwithstanding
any provision of this Agreement or any other Transaction Document to the
contrary, in no event shall the Administrator ever be required to take any
action which exposes the Administrator to personal liability or which is
contrary to the provision of any Transaction Document or applicable law.
(b) Each Purchaser hereby irrevocably designates and appoints the
respective institution identified as the Purchaser Agent for such Purchaser's
Purchaser Group on the signature pages hereto or in the Assumption Agreement or
Transfer Supplement pursuant to which such Purchaser becomes a party hereto, and
each authorizes such Purchaser Agent to take such action on its behalf under the
provisions of this Agreement and to exercise such powers and perform such duties
as are expressly delegated to such Purchaser Agent by the terms of this
Agreement, if any, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, no Purchaser Agent shall have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any
Purchaser or other Purchaser Agent or the Administrator, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities on
the part of such Purchaser Agent shall be read into this Agreement or otherwise
exist against such Purchaser Agent.
(c) Except as otherwise specifically provided in this Agreement, the
provisions of this Article V are solely for the benefit of the Purchaser Agents,
the Administrator and the Purchasers, and none of the Seller or Servicer shall
have any rights as a third-party beneficiary or otherwise under any of the
provisions of this Article V, except that this Article V shall not affect any
obligations which any Purchaser Agent, the Administrator or any Purchaser may
have to the Seller or the Servicer under the other provisions of this Agreement.
Furthermore, no Purchaser shall have any rights as a third-party beneficiary or
otherwise under any of the provisions hereof in respect of a Purchaser Agent
which is not the Purchaser Agent for such Purchaser.
(d) In performing its functions and duties hereunder, the Administrator
shall act solely as the agent of the Purchasers and the Purchaser Agents and
does not assume nor shall be deemed to have assumed any obligation or
relationship of trust or agency with or for the Seller or Servicer or any of
their successors and assigns. In performing its functions and duties hereunder,
each Purchaser Agent shall act solely as the agent of its respective Purchaser
Group and does not assume nor shall be deemed to have assumed any obligation or
relationship of trust or agency with or for the Seller, the Servicer, any other
Purchaser, any other Purchaser Agent or the Administrator, or any of their
respective successors and assigns.
Section 5.2. DELEGATION OF DUTIES. The Administrator may execute any of its
duties through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrator
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
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Section 5.3. EXCULPATORY PROVISIONS. None of the Purchaser Agents, the
Administrator or any of their directors, officers, agents or employees shall be
liable for any action taken or omitted (i) with the consent or at the direction
of the Majority Purchasers (or in the case of any Purchaser Agent, the
Purchasers within its Purchaser Group that have a majority of the aggregate
Commitment of such Purchaser Group) or (ii) in the absence of such Person's
gross negligence or willful misconduct. The Administrator shall not be
responsible to any Purchaser, Purchaser Agent or other Person for (i) any
recitals, representations, warranties or other statements made by the Seller,
Servicer, or any of their Affiliates, (ii) the value, validity, effectiveness,
genuineness, enforceability or sufficiency of any Transaction Document, (iii)
any failure of the Seller, the Originator or any of their Affiliates to perform
any obligation or (iv) the satisfaction of any condition specified in EXHIBIT
II. The Administrator shall not have any obligation to any Purchaser or
Purchaser Agent to ascertain or inquire about the observance or performance of
any agreement contained in any Transaction Document or to inspect the
properties, books or records of the Seller, Servicer, Originator or any of their
Affiliates.
Section 5.4. RELIANCE BY AGENTS. Each Purchaser Agent and the Administrator
shall in all cases be entitled to rely, and shall be fully protected in relying,
upon any document or other writing or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person and upon
advice and statements of legal counsel (including counsel to the Seller),
independent accountants and other experts selected by the Administrator. Each
Purchaser Agent and the Administrator shall in all cases be fully justified in
failing or refusing to take any action under any Transaction Document unless it
shall first receive such advice or concurrence of the Majority Purchasers (or in
the case of any Purchaser Agent, the Purchasers within its Purchaser Group that
have a majority of the aggregate Commitment of such Purchaser Group), and
assurance of its indemnification, as it deems appropriate.
(b) The Administrator shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement in accordance with a request of
the Majority Purchasers or the Purchaser Agents, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all Purchasers,
the Administrator and Purchaser Agents.
(c) The Purchasers within each Purchaser Group with a majority of the
Commitment of such Purchaser Group shall be entitled to request or direct the
related Purchaser Agent to take action, or refrain from taking action, under
this Agreement on behalf of such Purchasers. Such Purchaser Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement in accordance with a request of such majority Purchasers, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all of such Purchaser Agent's Purchasers.
(d) Unless otherwise advised in writing by a Purchaser Agent or by any
Purchaser on whose behalf such Purchaser Agent is purportedly acting, each party
to this Agreement may assume that (i) such Purchaser Agent is acting for the
benefit of each of the Purchasers
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in respect of which such Purchaser Agent is identified as being the
"Purchaser Agent" in the definition of "Purchaser Agent" hereto, as well as for
the benefit of each assignee or other transferee from any such Person, and (ii)
each action taken by such Purchaser Agent has been duly authorized and approved
by all necessary action on the part of the Purchasers on whose behalf it is
purportedly acting. Each Purchaser Agent and its Purchaser(s) shall agree
amongst themselves as to the circumstances and procedures for removal,
resignation and replacement of such Purchaser Agent.
Section 5.5. NOTICE OF TERMINATION EVENTS. Neither any Purchaser Agent nor
the Administrator shall be deemed to have knowledge or notice of the occurrence
of any Termination Event or Unmatured Termination Event unless such
Administrator has received notice from any Purchaser, Purchaser Agent, the
Servicer or the Seller stating that a Termination Event or Unmatured Termination
Event has occurred hereunder and describing such Termination Event or Unmatured
Termination Event. In the event that the Administrator receives such a notice,
it shall promptly give notice thereof to each Purchaser Agent whereupon each
such Purchaser Agent shall promptly give notice thereof to its Purchasers. In
the event that a Purchaser Agent receives such a notice (other than from the
Administrator), it shall promptly give notice thereof to the Administrator. The
Administrator shall take such action concerning a Termination Event or Unmatured
Termination Event as may be directed by the Majority Purchasers unless such
action otherwise requires the consent of all Purchasers), but until the
Administrator receives such directions, the Administrator may (but shall not be
obligated to) take such action, or refrain from taking such action, as the
Administrator deems advisable and in the best interests of the Purchasers and
Purchaser Agents.
Section 5.6. NON-RELIANCE ON ADMINISTRATOR, PURCHASER AGENTS AND OTHER
PURCHASERS. Each Purchaser expressly acknowledges that none of the
Administrator, the Purchaser Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Administrator, or any
Purchaser Agent hereafter taken, including any review of the affairs of the
Seller, Servicer or the Originator, shall be deemed to constitute any
representation or warranty by the Administrator or such Purchaser Agent, as
applicable. Each Purchaser represents and warrants to the Administrator and the
Purchaser Agents that, independently and without reliance upon the
Administrator, Purchaser Agents or any other Purchaser and based on such
documents and information as it has deemed appropriate, it has made and will
continue to make its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and
creditworthiness of the Seller, Servicer or the Originator, and the Receivables
and its own decision to enter into this Agreement and to take, or omit, action
under any Transaction Document. Except for items specifically required to be
delivered hereunder, the Administrator shall not have any duty or responsibility
to provide any Purchaser Agent with any information concerning the Seller,
Servicer or the Originator or any of their Affiliates that comes into the
possession of the Administrator or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
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Section 5.7. ADMINISTRATORS AND AFFILIATES. Each of the Purchasers and the
Administrator and their Affiliates may extend credit to, accept deposits from
and generally engage in any kind of banking, trust, debt, equity or other
business with the Seller, Servicer or the Originator or any of their Affiliates
and PNC Bank, National Association may exercise or refrain from exercising its
rights and powers as if it were not the Administrator. With respect to the
acquisition of the Receivables pursuant to this Agreement, each of the Purchaser
Agents and the Administrator shall have the same rights and powers under this
Agreement as any Purchaser and may exercise the same as though it were not such
an agent, and the terms "Purchaser" and "Purchasers" shall include each of the
Purchaser Agents and the Administrator in their individual capacities.
Section 5.8. INDEMNIFICATION. Each Purchaser Group (it being understood
that, in the case of the Purchaser Group including TRFCO, the provisions of this
SECTION 5.8 shall only apply to each Purchaser therein) shall indemnify and hold
harmless the Administrator (but solely in its capacity as Administrator) and its
officers, directors, employees, representatives and agents (to the extent not
reimbursed by the Seller, KU or Servicer and without limiting the obligation of
the Seller, KU or Servicer to do so), ratably in accordance with its Ratable
Share from and against any and all liabilities, obligations, losses, damages,
penalties, judgments, settlements, costs, expenses and disbursements of any kind
whatsoever (including in connection with any investigative or threatened
proceeding, whether or not the Administrator or such Person shall be designated
a party thereto) that may at any time be imposed on, incurred by or asserted
against the Administrator or such Person as a result of, or related to, any of
the transactions contemplated by the Transaction Documents or the execution,
delivery or performance of the Transaction Documents or any other document
furnished in connection therewith (but excluding any such liabilities,
obligations, losses, damages, penalties, judgments, settlements, costs, expenses
or disbursements resulting solely from the gross negligence or willful
misconduct of the Administrator or such Person as finally determined by a court
of competent jurisdiction); PROVIDED, that in the case of each Purchaser that is
a commercial paper conduit, such indemnity shall be provided solely to the
extent of amounts received by such Purchaser under this Agreement which exceed
the amounts required to repay such Purchaser's outstanding Notes.
Notwithstanding anything in this SECTION 5.8 to the contrary, each of the
Administrator, each Purchaser Agent and each Purchaser hereby covenants and
agrees that it shall not institute against, or join any other Person in
instituting against, any Conduit Purchaser any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other proceedings under any
federal or state bankruptcy or similar law, for one year and a day after the
latest maturing Note issued by such Conduit Purchaser is paid in full.
Section 5.9. SUCCESSOR ADMINISTRATOR. The Administrator may, upon at least
five (5) days notice to the Seller and each Purchaser and Purchaser Agent,
resign as Administrator. Such resignation shall not become effective until a
successor agent is appointed by the Majority Purchasers and has accepted such
appointment. Upon such acceptance of its appointment as Administrator hereunder
by a successor Administrator, such successor Administrator shall succeed to and
become vested with all the rights and duties of the retiring Administrator, and
the retiring Administrator shall be discharged from its duties
26
and obligations under the Transaction Documents. After any retiring
Administrator's resignation hereunder, the provisions of SECTIONS 3.1 and 3.2
and this Article V shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was the Administrator.
ARTICLE VI.
MISCELLANEOUS
Section 6.1. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement or any other Transaction Document, or consent to any departure by
the Seller or the Servicer therefrom, shall be effective unless in a writing
signed by the Administrator, each Purchaser Agent, each Conduit Purchaser and
the Majority Purchasers, and, in the case of any amendment, by the other parties
thereto; and then such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; PROVIDED,
HOWEVER that no such amendment or waiver shall, without the consent of each
affected Purchaser, (A) extend the date of any payment or deposit of Collections
by the Seller or the Servicer, (B) reduce the rate or extend the time of payment
of Yield, (C) reduce any fees payable to the Administrator, any Purchaser Agent
or any Purchaser pursuant to the applicable Purchaser Group Fee Letter, (D)
change the amount of Aggregate Investment of any Purchaser, or, except as
contemplated by SECTION 1.4 or in connection with an Assumption Agreement in
accordance with the terms hereof, any Purchaser's pro rata share of the
Purchased Interest or any Related Committed Purchaser's Commitment, (E) amend,
modify or waive any provision of the definition of "Majority Purchaser" or this
SECTION 6.1, (F) consent to or permit the assignment or transfer by the Seller
of any of its rights and obligations under this Agreement, (G) change the
definition of "Eligible Receivable," "Loss Reserve," "Loss Reserve Percentage,"
"Dilution Reserve," "Dilution Reserve Percentage" or CLAUSE (G) of the
definition of "Termination Event" or (H) amend or modify any defined term (or
any defined term used directly or indirectly in such defined term) used in
clauses (A) through (G) above in a manner that would circumvent the intention of
the restrictions set forth in such clauses. No failure on the part of the
Purchasers or the Administrator to exercise, and no delay in exercising any
right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.
Section 6.2. NOTICES, ETC. All notices and other communications hereunder
shall, unless otherwise stated herein, be in writing (which shall include
facsimile communication) and be sent or delivered to each party hereto at its
address set forth under its name on the signature pages hereof (or in any
Assumption Agreement or Transfer Supplement pursuant to which it became a party
hereto) or at such other address as shall be designated by such party in a
written notice to the other parties hereto. Notices and communications by
facsimile shall be effective when sent (and shall be followed by hard copy sent
by first class mail), and notices and communications sent by other means shall
be effective when received.
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Section 6.3. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; ASSIGNMENTS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Except as otherwise provided herein, the Seller may not assign or
transfer any of its rights or delegate any of its duties hereunder or under any
Transaction Document without the prior consent of the Administrator, the
Purchaser Agents and the Purchasers.
(b) PARTICIPATIONS. Any Purchaser may sell to one or more Persons (each a
"Participant") participating interests in the interests of such Purchaser
hereunder; PROVIDED, HOWEVER, that no Purchaser shall grant any participation
under which the Participant shall have rights to approve any amendment to or
waiver of this Agreement or any other Transaction Document. Such Purchaser shall
remain solely responsible for performing its obligations hereunder, and the
Seller, each Purchaser Agent and the Administrator shall continue to deal solely
and directly with such Purchaser in connection with such Purchaser's rights and
obligations hereunder. A Purchaser shall not agree with a Participant to
restrict such Purchaser's right to agree to any amendment hereto, except
amendments that require the consent of all Purchasers.
(c) ASSIGNMENTS BY CERTAIN RELATED COMMITTED PURCHASERS. Any Related
Committed Purchaser may assign to one or more Persons (each a "Purchasing
Related Committed Purchaser"), reasonably acceptable to the related Purchaser
Agent in its sole discretion, any portion of its Commitment pursuant to a
supplement hereto, substantially in the form of ANNEX E with any changes as have
been approved by the parties thereto (a "Transfer Supplement"), executed by each
such Purchasing Related Committed Purchaser and such selling Related Committed
Purchaser and consented to by such related Purchaser Agent and Seller (which
consent shall not be unreasonably withheld or delayed). Any such assignment by
Related Committed Purchaser cannot be for an amount less than $10,000,000. Upon
(i) the execution of the Transfer Supplement, (ii) delivery of an executed copy
thereof to the Seller, such related Purchaser Agent and the Administrator and
(iii) payment by the Purchasing Related Committed Purchaser to the selling
Related Committed Purchaser of the agreed purchase price, such selling Related
Committed Purchaser shall be released from its obligations hereunder to the
extent of such assignment and such Purchasing Related Committed Purchaser shall
for all purposes be a Related Committed Purchaser party hereto and shall have
all the rights and obligations of a Related Committed Purchaser hereunder to the
same extent as if it were an original party hereto. The amount of the Commitment
of the selling Related Committed Purchaser allocable to such Purchasing Related
Committed Purchaser shall be equal to the amount of the Commitment of the
selling Related Committed Purchaser transferred regardless of the purchase price
paid therefor. The Transfer Supplement shall be an amendment hereof only to the
extent necessary to reflect the addition of such Purchasing Related Committed
Purchaser as a "Related Committed Purchaser" and any resulting adjustment of the
selling Related Committed Purchaser's Commitment.
(d) REPLACEABLE PURCHASERS AND PURCHASER GROUPS. If any Purchaser (a
"Replaceable Purchaser" and, together with the other members of such entity's
Purchaser
28
Group, a "Replaceable Purchaser Group") shall (i) make demand upon the Seller
for any amounts under SECTION 1.7 or 1.8, (ii) give notice under SECTION 1.9(b)
of its inability to fund or maintain any portion of Investment at the Yield Rate
determined by references to the Euro-Rate or (iii) cease to have a short-term
debt rating of "A-1" by Standard & Poor's and "P-1" by ▇▇▇▇▇'▇ (if such a rating
is required by the related Purchaser's securitization program), then either (A)
the related Purchaser Agent may designate a replacement financial institution (a
"Replacement Purchaser") that shall either be an Affiliate of the related
Purchaser Agent or reasonably acceptable to the Seller, (B) if such Replaceable
Purchaser is a Related Committed Purchaser and is not either a Conduit Purchaser
or an Affiliate of its Purchaser Agent, the Seller may designate a Replacement
Purchaser acceptable to the Administrator and the applicable Purchaser Agent or
(C) if such Replaceable Purchaser is either a Conduit Purchaser or an Affiliate
of its Purchaser Agent, the Seller may designate a replacement Purchaser Group
(a "Replacement Purchaser Group") acceptable to the Administrator and each
Purchaser Agent (other than the Purchaser Agent for the Replaceable Purchaser
Group). After such designation, the Replaceable Purchaser (in the case of a
designation under CLAUSE (a) or (b) above) or the Replaceable Purchaser Group
(in the case of a designation under CLAUSE (c) above) shall, subject to its
receipt of an amount equal to the aggregate outstanding principal balance of its
Investment and accrued and unpaid Discount thereon (and, if applicable, its
receipt (unless a later date for the remittance thereof shall be agreed upon by
the Seller and such Replaceable Purchaser or Replaceable Purchaser Group) of all
amounts claimed under SECTION 1.7 and/or 1.8) promptly assign all of its rights,
obligations and Commitment hereunder, together with all of its right, title and
interest in, to and under the Purchased Interest allocable to it, to the
Replacement Purchaser or to the Replacement Purchaser Group (as appropriate).
Once such assignment becomes effective, the Replacement Purchaser, or each
member of the Replacement Purchaser Group, shall be deemed to be a "Purchaser"
or "Purchaser Agent" (as appropriate) for all purposes hereof and such
Replaceable Purchaser or each member of such Replaceable Purchaser Group (as
appropriate) shall cease to be a " Purchaser"or "Purchaser Agent" (as
appropriate) for all purposes hereof and shall have no further rights or
obligations hereunder.
(e) ASSIGNMENT BY CONDUIT PURCHASERS. Each party hereto agrees and consents
(i) to any Conduit Purchaser's assignment, participation, grant of security
interests in or other transfers of any portion of, or any of its beneficial
interest in, the Purchased Interest (or portion thereof), including without
limitation to any collateral agent in connection with its commercial paper
program; and (ii) to the complete assignment by any Conduit Purchaser of all of
its rights and obligations hereunder to any other Person, and upon any such
complete assignment such Conduit Purchaser shall be released from all
obligations and duties, if any, hereunder; PROVIDED, HOWEVER, that such Conduit
Purchaser may not, without the prior consent of its Related Committed Purchasers
(or, if such Conduit Purchaser is also a Related Committed Purchaser, its
Purchaser Agent), make any such transfer of its rights hereunder unless the
assignee (A) is principally engaged in the purchase of assets similar to the
assets being purchased hereunder, (B) has as its Purchaser Agent the Purchaser
Agent of the assigning Conduit Purchaser and (C) issues commercial paper or
other Notes with credit ratings substantially comparable to the ratings of the
assigning Conduit Purchaser. Any assigning Conduit Purchaser shall deliver to
any assignee a supplement hereto, substantially
29
in the form of ANNEX E with any changes as have been approved by the
parties thereto (also, a "Transfer Supplement"), duly executed by such Conduit
Purchaser, assigning any portion of its interest in the Purchased Interest to
its assignee. Such Conduit Purchaser shall promptly (x) notify each of the other
parties hereto of such assignment and (y) take all further action that the
assignee reasonably requests in order to evidence the assignee's right, title
and interest in such interest in the Purchased Interest and to enable the
assignee to exercise or enforce any rights of such Conduit Purchaser hereunder.
Upon the assignment of any portion of its interest in the Purchased Interest,
the assignee shall have all of the rights hereunder with respect to such
interest (except that the Discount therefor shall thereafter accrue at the
applicable rate, determined with respect to the assigning Conduit Purchaser
unless the Seller, the related Purchaser Agent and the assignee shall have
agreed upon a different Discount).
(f) OPINIONS OF COUNSEL. If required by the Administrator or the applicable
Purchaser Agent or to maintain the ratings of any Conduit Purchaser, each
Transfer Supplement must be accompanied by an opinion of counsel of the assignee
as to such matters as the Administrator or such Purchaser Agent may reasonably
request.
Section 6.4. COSTS, EXPENSES AND TAXES. In addition to the rights of
indemnification granted under SECTION 3.1, the Seller agrees to pay on demand
(which demand shall be accompanied by documentation thereof in reasonable
detail) all reasonable costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic internal audits by
the Administrator of Pool Receivables) of this Agreement, the other Transaction
Documents and the other documents and agreements to be delivered hereunder (and
all reasonable costs and expenses in connection with any amendment, waiver or
modification of any thereof), including: (i) Attorney Costs for the
Administrator, each Purchaser Agent and each Purchaser who is an Affiliate of a
Purchaser Agent with respect thereto and with respect to advising the
Administrator and each Purchaser Group as to their rights and remedies under
this Agreement and the other Transaction Documents, and (ii) all reasonable
costs and expenses (including Attorney Costs), if any, of the Administrator,
each Purchaser Group and their respective Affiliates in connection with the
enforcement of this Agreement and the other Transaction Documents. In addition,
the Seller shall pay on demand any and all stamp and other taxes and fees
payable in connection with the execution, delivery, filing and recording of this
Agreement or the other documents or agreements to be delivered hereunder, and
agrees to save each Indemnified Party harmless from and against any liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes and fees.
Section 6.5. NO PROCEEDINGS; LIMITATION ON PAYMENTS. Each of the Seller,
KU, the Servicer, the Administrator, the Purchaser Agents, the Purchasers, each
assignee of the Purchased Interest or any interest therein, and each Person that
enters into a commitment to purchase the Purchased Interest or interests
therein, hereby covenants and agrees that it will not institute against, or join
any other Person in instituting against, any Conduit Purchaser any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law, for one year
and one day
30
after the latest maturing Note issued by such Conduit Purchaser is paid in full.
The provision of this SECTION 6.5 shall survive any termination of this
Agreement.
Section 6.6.CONFIDENTIALITY. Each of the Seller and the Servicer agrees to
maintain the confidentiality of this Agreement and the other Transaction
Documents (and all drafts thereof) in communications with third parties and
otherwise; PROVIDED, that this Agreement may be disclosed to: (a) third parties
to the extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the
Administrator, and (b) the Seller's legal counsel and auditors if they agree to
hold it confidential. Unless otherwise required by applicable law, each of the
Administrator and each Purchaser Agent and each Purchaser agree to maintain the
confidentiality of non-public financial information regarding the Originator and
its Subsidiaries and Affiliates; PROVIDED, that such information may be
disclosed to: (i) prospective Purchasers, to the extent such prospective
Purchasers agree to maintain the confidentiality of such information in
accordance with this SECTION 6.6, (ii) legal counsel and auditors of any member
of any Purchaser Group or the Administrator if they agree to hold it
confidential, (iii) the rating agencies rating the Notes, (iv) any Program
Support Provider or potential Program Support Provider (if they agree to hold it
confidential), (v) any placement agent placing the Notes and (vi) any regulatory
authorities having jurisdiction over PNC, any member of any Purchaser Group, or
any Program Support Provider. In no instance shall this section prevent the
disclosure of information at the request or demand of, and to, a Governmental
Authority having jurisdiction over the disclosing party, or disclosure pursuant
to any order of a court or Governmental Authority, or as otherwise required by
law.
Section 6.7. GOVERNING LAW AND JURISDICTION.
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING FOR SUCH
PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF
NEW YORK) EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF A SECURITY
INTEREST OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
Section 6.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which, when so executed, shall be deemed to
be an original, and all of which, when taken together, shall constitute one and
the same agreement.
Section 6.9. SURVIVAL OF TERMINATION. The provisions of SECTIONS 1.7, 1.8,
3.1, 3.2, 6.4, 6.5, 6.7, 6.10 and 6.15 shall survive any termination of this
Agreement.
Section 6.10. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS
31
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR
OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING THAT SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT.
Section 6.11. SHARING OF RECOVERIES. Each Purchaser agrees that if it
receives any recovery, through set-off, judicial action or otherwise, on any
amount payable or recoverable hereunder in a proportion greater than that which
its share of the aggregate Commitments would entitle it to or otherwise
inconsistent with the provisions hereof, then the recipient of such recovery
shall purchase for cash an interest in amounts owing to the other Purchasers (as
return of Investment or otherwise), without representation or warranty except
for the representation and warranty that such interest is being sold by each
such other Purchaser free and clear of any Adverse Claim created or granted by
such other Purchaser, in the amount necessary to create proportional
participation by the Purchaser in such recovery. If all or any portion of such
amount is thereafter recovered from the recipient, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
Section 6.12. RIGHT OF SETOFF. During a Termination Event, each Purchaser
is hereby authorized (in addition to any other rights it may have) to setoff,
appropriate and apply (without presentment, demand, protest or other notice
which are hereby expressly waived) any deposits and any other indebtedness held
or owing by such Purchaser (including by any branches or agencies of such
Purchaser) to, or for the account of, the Seller against amounts owing by the
Seller hereunder (even if contingent or unmatured).
Section 6.13. ENTIRE AGREEMENT. This Agreement and the other Transaction
Documents embody the entire agreement and understanding between the parties
hereto, and supersede all prior or contemporaneous agreements and understandings
of such Persons, verbal or written, relating to the subject matter hereof and
thereof.
Section 6.14. HEADINGS. The captions and headings of this Agreement and any
Exhibit, Schedule or Annex hereto are for convenience of reference only and
shall not affect the interpretation hereof or thereof.
Section 6.15. PURCHASER GROUPS' LIABILITIES. The obligations of each
Purchaser Agent and each Purchaser under the Transaction Documents are solely
the corporate obligations of such Person. Except with respect to any claim
arising out of the willful
32
misconduct or gross negligence of the Administrator, any Purchaser Agent or
any Purchaser, no claim may be made by the Seller or the Servicer or any other
Person against the Administrator, any Purchaser Agent or any Purchaser or their
respective Affiliates, directors, officers, employees, attorneys or agents for
any special, indirect, consequential or punitive damages in respect of any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by the Agreement or any other
Transaction Document, or any act, omission or event occurring in connection
therewith; and each of Seller and Servicer hereby waives, releases, and agrees
not to ▇▇▇ upon any claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
33
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
KU RECEIVABLES LLC
By:
Name:
Title:
Address:
KU Receivables LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
KENTUCKY UTILITIES COMPANY
as Servicer
By:
Name:
Title:
Address:
Kentucky Utilities Company
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ FUNDING CORPORATION
As Conduit Purchaser and as a Related
Committed Purchaser
By:
Name:
Title:
Address:
Market Street Funding Corporation
c/o AMACAR Group, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
PNC Bank, National Association
One PNC Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Commitment: $ 25,000,000
2
PNC BANK, NATIONAL ASSOCIATION,
as Administrator and as Purchaser Agent for
Market Street Funding Corporation
By:
Name:
Title:
Address:
PNC Bank, National Association
One PNC Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
3
THREE RIVERS FUNDING CORPORATION
As Conduit Purchaser and as a Related Committed
Purchaser
By:
Name:
Title:
Address:
c/o Global Securitization Services, LLC
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Mellon Bank, N.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Commitment: $ 25,000,000
4
MELLON BANK, N.A.,
as Purchaser Agent for Three Rivers Funding
Corporation
By:
Name:
Title:
Address:
Mellon Bank, N.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
5
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits, Schedules and Annexes),
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).
Unless otherwise indicated, all Section, Annex, Exhibit and Schedule references
in this Exhibit are to Sections of and Annexes, Exhibits and Schedules to the
Agreement.
"Administrator's Account" means the account (account number 1002422076) of
the Administrator maintained at the office of PNC at One PNC Plaza, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or such other account as may be so
designated in writing by the Administrator to the Servicer.
"Administrator" has the meaning set forth in the preamble to the Agreement.
"Adverse Claim" means a lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement; it being understood
that any thereof in favor of the Administrator (for the benefit of the
Purchasers ) shall not constitute an Adverse Claim.
"Affected Person" has the meaning set forth in SECTION 1.7 of the
Agreement.
"Affiliate" shall have the following meanings:
(1) for all purposes of the Agreement other than for the purposes of the
definitions of "Eligible Receivables" and "Receivables", PARAGRAPHS 1(d)
AND 2(k) of EXHIBIT III and PARAGRAPH 3 OF EXHIBIT IV, as to KU (in both of
its capacities as Originator and as Servicer), the Seller and the
Sub-Servicer, "Affiliate" means KU, the Seller, the Sub-Servicer and any
other Person that, directly or indirectly, is controlled by KU, and
(2) for the purposes of the definitions of "Eligible Receivables" and
"Receivables", PARAGRAPHS 1(d) AND 2(k) of EXHIBIT III and PARAGRAPH 3 of
EXHIBIT IV, as to KU (in both of its capacities as Originator and as
Servicer), the Seller and the Sub-Servicer and for all purposes of this
Agreement as to any other Person, "Affiliate" means: (a) any Person that,
directly or indirectly, is in control of, is controlled by or is under
common control with such Person, or (b) who is a director or officer: (i)
of such Person or (ii) of any Person described in CLAUSE (A), except that,
in the case of each Conduit Purchaser, Affiliate shall mean the holder of
its capital stock. For purposes of this definition, control of a Person
shall mean the power, direct or indirect: (x) to vote 25% or more of the
securities having ordinary voting power for the election of directors of
such Person, or (y) to direct or cause the direction of the management
I-1
and policies of such Person, in either case whether by ownership of
securities, contract, proxy or otherwise.
"Aggregate Discount" at any time, means the sum of the aggregate for each
Purchaser of the accrued and unpaid Discount with respect to each such
Purchaser's Investment at such time.
"Aggregate Investment" means the sum of the amounts paid to the Seller in
respect of the Purchased Interest or portion thereof by each Purchaser pursuant
to the Agreement, as reduced from time to time by Collections distributed and
applied on account of the Purchasers' respective shares of such Aggregate
Investment pursuant to SECTION 1.4(d) of the Agreement; PROVIDED, that if such
Aggregate Investment shall have been reduced by any distribution, and thereafter
all or a portion of such distribution is rescinded or must otherwise be returned
for any reason, such Aggregate Investment shall be increased by the amount of
such rescinded or returned distribution as though it had not been made.
"Agreement" has the meaning set forth in the preamble to the Agreement.
"Assumption Agreement" means an agreement substantially in the form set
forth in ANNEX D to the Agreement.
"Attorney Costs" means and includes all reasonable fees and disbursements
of any law firm or other external counsel, the reasonable allocated cost of
internal legal services and all reasonable disbursements of internal counsel.
"Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978 (11
U.S.C.Section. 101, et seq.), as amended from time to time.
"Base Rate" means, for any day, (i) in the case of the Purchaser Group
including Market Street, the Market Street Base Rate, and (ii) in the case of
each other Purchaser Group, the rate set forth as the Base Rate for such
Purchaser Group in the related Purchaser Group Fee Letter.
"BBA" means the British Bankers' Association.
"Benefit Plan" means any employee benefit pension plan as defined in
Section 3(2) of ERISA in respect of which the Seller, the Originator or any
ERISA Affiliate is, or at any time during the immediately preceding six years
was, an "employer" as defined in Section 3(5) of ERISA.
"Business Day" means any day (other than a Saturday or Sunday) on which:
(a) banks are not authorized or required to close in New York City, New York or
Pittsburgh, Pennsylvania, and (b) if this definition of "Business Day" is
utilized in connection with the Euro-Rate, dealings are carried out in the
London interbank market.
"Change in Control" means that the Originator ceases to own, directly or
indirectly 100% of the capital stock of the Seller free and clear of all Adverse
Claims.
"Closing Date" means February 6, 2001.
I-2
"Collections" means, with respect to any Pool Receivable: (a) all funds
that are received by the Originator, the Seller or the Servicer in payment of
any amounts owed in respect of such Receivable (including purchase price,
finance charges, interest and all other charges), or applied to amounts owed in
respect of such Receivable (including insurance payments and net proceeds of the
sale or other disposition of repossessed goods or other collateral or property
of the related Obligor or any other Person directly or indirectly liable for the
payment of such Pool Receivable and available to be applied thereon), (b) all
amounts deemed to have been received pursuant to SECTION 1.4(e) of the Agreement
and (c) all other proceeds of such Pool Receivable.
"Commitment" means, with respect to each Related Committed Purchaser, the
maximum amount which such Purchaser is obligated to pay hereunder on account of
any Purchase, as set forth below its signature to this Agreement or in the
Assumption Agreement or Transfer Supplement pursuant to which it became a
Purchaser, as such amount may be modified in connection with any subsequent
assignment pursuant to SECTION 6.3(c), increased pursuant to SECTION 1.2(e) or
modified in connection with a change in the Purchase Limit pursuant to SECTION
1.1(b).
"Commitment Percentage" means, for each Related Committed Purchaser in a
Purchaser Group, such Related Committed Purchaser's Commitment divided by the
total of all Commitments of all Related Committed Purchasers in such Purchaser
Group.
"Company Note" has the meaning set forth in SECTION 3.1 of the Sale
Agreement.
"Concentration Percentage" means: (a) for any Group A Obligor or Group B
Obligor, 10%, (b) for any Group C Obligor, 5% and (c) for any Group D Obligor
2.5%.
"Community Banks" shall mean, (i) prior to the occurrence of a Community
Lock-Box Event, the Lock-Box Banks identified as such on Schedule II hereto and
(ii) after the occurrence of a Community Lock-Box Event, such Lock-Box Banks as
the Administrator shall designate in its sole discretion.
"Community Bank Lock-Box Event" means that the Originator shall cease to
have a rating of at leaset "BBB-" by Standard & Poor's or "Baa3" by Moody's on
its long-term senior secured debt securities (without third-party
credit-enhancement).
"Conduit Purchasers" means each commercial paper conduit that is a party to
the Agreement, as a purchaser, or that becomes a party to the Agreement, as a
purchaser pursuant to an Assumption Agreement or a Transfer Supplement.
"Contract" means, with respect to any Receivable, any and all contracts,
instruments, agreements, leases, invoices, notes or other writings pursuant to
which such Receivable arises or that evidence such Receivable or under which an
Obligor becomes or is obligated to make payment in respect of such Receivable.
I-3
"CP Rate" for any Yield Period for any Portion of Investment (i) in the
case of the Purchaser Group including Market Street, means the Market Street CP
Rate and (ii) in the case of each of other Purchaser Group shall mean the rate
set forth as the CP Rate for such Purchaser Group in the related Purchaser Group
Fee Letter.
"Credit and Collection Policy" means, as the context may require, those
receivables credit and collection policies and practices of the Originator in
effect on the date of the Agreement and described in SCHEDULE I to the
Agreement, as modified in compliance with the Agreement.
"Cut-off Date" has the meaning set forth in the Sale Agreement.
"Days' Sales Outstanding" means, for any calendar month, an amount computed
as of the last day of such calendar month equal to: (a) the average of the
Outstanding Balance of all Pool Receivables as of the last day of each of the
three most recent calendar months ended on the last day of such calendar month
divided by (b)(i) the aggregate credit sales made by the Originator during the
three calendar months ended on the last day of such calendar month divided by
(ii) 90.
"Debt" means: (a) indebtedness for borrowed money, (b) obligations
evidenced by bonds, debentures, notes or other similar instruments, (c)
obligations to pay the deferred purchase price of property or services, (d)
obligations as lessee under leases that shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, and (e) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in CLAUSES (a) through (d).
"Default Ratio" means the ratio (expressed as a percentage and rounded to
the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the
last day of each calendar month by dividing: (a) the aggregate Outstanding
Balance of all Pool Receivables that became Defaulted Receivables during such
month, by (b) the aggregate credit sales made by the Originator during the month
that is two calendar months before such month.
"Defaulted Receivable" means a Receivable:
(a) as to which any payment, or part thereof, remains unpaid for more
than 46 days, in each case from the original invoice date for such payment,
or
(b) without duplication (i) as to which an Insolvency Proceeding shall
have occurred with respect to the Obligor thereof or any other Person
obligated thereon or owning any Related Security with respect thereto, (ii)
that has been written off the Seller's books as uncollectible or (iii) that
should have been written off the Seller's books as uncollectible pursuant
to the Credit and Collection Policy.
I-4
"Delinquency Ratio" means the ratio (expressed as a percentage and rounded
to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of
the last day of each calendar month by dividing: (a) the aggregate Outstanding
Balance of all Pool Receivables that were Delinquent Receivables on such day by
(b) the aggregate Outstanding Balance of all Pool Receivables on such day.
"Delinquent Receivable" means a Receivable (a) as to which any payment, or
part thereof, remains unpaid for more than 46 days from the original invoice
date for such payment or (b) without duplication, which has been (or consistent
with the Credit and Collection Policy, would be) classified as a Delinquent
Receivable by the Originator.
"Dilution Reserve" means, on any day, an amount equal to: (a) the Aggregate
Investment at the close of business of the Servicer on such date MULTIPLIED BY
(b) (i) the Dilution Reserve Percentage on such date, DIVIDED BY (ii) 100% minus
the Dilution Reserve Percentage on such date.
"Dilution Reserve Percentage" means 1%, or such other higher percentage as
the Administrator may designate by written notice to the Seller and the Servicer
from time to time.
"Disbursement Account" has the meaning set forth in SECTION 1.2(b).
"Discount" means with respect to any Purchaser:
(a) for any Portion of Investment for any Yield Period with respect to
any Purchaser to the extent such Portion of Investment will be funded by
such Purchaser during such Yield Period through the issuance of Notes:
CPR x I x ED/360
(b) for any Portion of Investment for any Yield Period with respect to
any Purchaser to the extent such Portion of Investment will not be funded
by such Purchaser during such Yield Period through the issuance of Notes:
YR x I x ED/Year + TF
where:
YR = the Yield Rate, as applicable, for such Portion of
Investment for such Yield Period with respect to such
Purchaser,
I = the Investment with respect to such Portion of
Investment during such Yield Period with respect to
such Purchaser,
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CPR = the CP Rate for the Portion of Investment for such
Yield Period with respect to such Purchaser,
ED = the actual number of days during such Yield Period,
Year = if such Portion of Investment is funded based upon:
(i) the Euro-Rate, 360 days, and (ii) the Base Rate,
365 or 366 days, as applicable, and
TF = the Termination Fee, if any, for the Portion of
Investment for such Yield Period with respect to such
Purchaser;
PROVIDED, that no provision of the Agreement shall require the payment or permit
the collection of Discount in excess of the maximum permitted by applicable law;
and PROVIDED FURTHER, that Discount for any Portion of Investment shall not be
considered paid by any distribution to the extent that at any time all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason.
"Eligible Receivable" means, at any time, a Pool Receivable:
(a) the Obligor of which is (i) a United States resident, (ii) not a
government or a governmental subdivision, affiliate or agency (other than a
state or local government, agencies or instrumentalities as to which the
Seller shall have provided evidence (including opinions or memorandum of
counsel) satisfactory to the Administrator that the Receivables of such
state or local government, agencies or instrumentalities Obligor are not
subject to any limitations on assignment or offset rights similar in any
respect to the Federal Assignment of Claims Act), (iii) not subject to any
action of the type described in PARAGRAPH (F) of EXHIBIT V to the Agreement
and (iv) not an Affiliate of the Originator or any Affiliate of the
Originator,
(b) that is denominated and payable only in U.S. dollars in the United
States,
(c) that does not have a stated maturity or due date which is more
than 30 days after the original invoice date of such Receivable,
(d) that arises under a duly authorized Contract or applicable Legal
Requirement in respect of the sale and delivery of goods and services in
the ordinary course of the Originator's business,
(e) that arises under a duly authorized Contract or applicable Legal
Requirement that is in full force and effect and that is a legal, valid and
binding obligation of the related Obligor, enforceable against such Obligor
in accordance with its terms,
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(f) that conforms in all material respects with all applicable Legal
Requirements in effect,
(g) that is not the subject of any asserted dispute, hold back
defense, Adverse Claim, other claim or offset (other than an offset for
amounts payable by the Originator in the ordinary course of the
Originator's business to the related Obligor arising from a Security
Deposit or an Obligor Payment Plan or pursuant to the terms of an Energy
Wholesale Contract),
(h) that satisfies all applicable requirements of the applicable
Credit and Collection Policy,
(i) that has not been modified, waived or restructured since its
creation, except as permitted pursuant to SECTION 4.2 of the Agreement,
(j) in which the Seller owns good and marketable title, free and clear
of any Adverse Claims, and that is freely assignable by the Seller
(including without any consent of the related Obligor),
(k) for which the Administrator (for the benefit of each Purchaser)
shall have a valid and enforceable undivided percentage ownership or
security interest, to the extent of the Purchased Interest, and a valid and
enforceable first priority perfected security interest therein and in the
Related Security and Collections with respect thereto, in each case free
and clear of any Adverse Claim,
(l) that constitutes an account as defined in the UCC, and that is not
evidenced by instruments or chattel paper,
(m) that is not a Defaulted Receivable or a Delinquent Receivable;
(n) for which none of the Originator, the Seller and the Servicer has
established any offset arrangements with the related Obligor (except for
any such arrangement in connection with a Security Deposit or Obligor
Payment Plan or contained in an Energy Wholesale Contract),
(o) for which Defaulted Receivables of the related Obligor do not
exceed 25% of the Outstanding Balance of all such Obligor's Receivables,
(p) that represents amounts earned and payable by the Obligor that are
not subject to the performance of additional services by the Originator;
PROVIDED, HOWEVER that no receivable shall be deemed ineligible solely
because the Originator is or may be entitled, subject to the performance of
additional services by the Originator, to unearned payments from the
related Obligor representing a Security Deposit or under an Obligor Payment
Plan connected to such Receivable,
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(q) for which the related Obligor is not an Excluded Obligor,
(r) that, prior to the Energy Wholesale Addition Date, does not arise
under or subject to an Energy Wholesale Contract.
"EMPP Accumulator Balance" means, at any time, the dollar amount of the
aggregate surplus of amounts paid by the Obligors over the amount paid by the
Originator shown in the Servicer's records tracking the payment status of the
Receivables subject to Obligor Payment Plans, or, if such records shall show a
deficit, 0.
"Energy Wholesale Contract" means any contract between the Originator and
any power marketers, wholesale energy traders or public utilities who are an
Obligor of the Originator providing for the sale, purchase and/or exchange of
energy resources and related services and any netting agreements entered into in
connection therewith.
"Energy Wholesale Addition Date" means a date selected by the Administrator
(with the consent of the Seller) in its sole discretion and conveyed to the
Seller and the Servicer by written notice.
"Energy Wholesale Payables" means, at any time, the aggregate amount
payable by the Originator to all Obligors pursuant to the terms of the Energy
Wholesale Contracts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"ERISA Affiliate" means: (a) any corporation that is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Internal Revenue Code) as the Seller or the Originator, (b) a trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Internal Revenue Code) with the Seller or the Originator,
or (c) a member of the same affiliated service group (within the meaning of
Section 414(m) of the Internal Revenue Code) as the Seller, the Originator, any
corporation described in CLAUSE (a) or any trade or business described in CLAUSE
(b).
"Euro-Rate" means with respect to any Yield Period, the interest rate per
annum determined by the Administrator by dividing (the resulting quotient
rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the
rate of interest determined by the applicable Purchaser Agent in accordance with
its usual procedures (which determination shall be conclusive absent manifest
error) to be the average of the London interbank market offered rates for U.S.
dollars quoted by the BBA as set forth on Dow ▇▇▇▇▇ Markets Service (formerly
known as Telerate) (or appropriate successor or, if British Bankers' Association
or its successor ceases to provide display page 3750 (or such other display page
on the Dow ▇▇▇▇▇ Markets Service system as may replace display page 3750)) at or
about 11:00 a.m. (London time) on the Business Day which is two (2) Business
Days prior to the first day of
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such Yield Period for an amount comparable to the Portion of Investment to be
funded at the Yield Rate and based upon the Euro-Rate during such Yield Period
by (ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. The
Euro-Rate may also be expressed by the following formula:
Average of London interbank offered rates quoted by BBA
as shown on Dow ▇▇▇▇▇ Markets Service display page 3750
or appropriate successor
Euro-Rate =
1.00 - Euro-Rate Reserve Percentage
where "Euro-Rate Reserve Percentage" means, the maximum effective percentage in
effect on such day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including without limitation, supplemental, marginal, and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
"Eurocurrency Liabilities"). The Euro-Rate shall be adjusted with respect to any
Portion of Investment funded at the Yield Rate and based upon the Euro-Rate that
is outstanding on the effective date of any change in the Euro-Rate Reserve
Percentage as of such effective date. The applicable Purchaser Agent shall give
prompt notice to the Seller of the Euro-Rate as determined or adjusted in
accordance herewith (which determination shall be conclusive absent manifest
error).
"Excess Concentration" means the sum of the amounts by which the
Outstanding Balance of Eligible Receivables of each Obligor then in the
Receivables Pool exceeds an amount equal to: (a) the applicable Concentration
Percentage for such Obligor multiplied by (b) the Outstanding Balance of all
Eligible Receivables then in the Receivables Pool that have been allocated to
specific Obligors.
"Excluded Obligor" means an Obligor listed on ANNEX C, and any other
Obligor identified by the Administrator as an Excluded Obligor by written notice
to the Seller and the Servicer.
"Exiting Purchaser" has the meaning set forth in SECTION 1.4(b)(ii).
"Facility Termination Date" means the earliest to occur of: (a) with
respect to each Purchaser February 6, 2004, subject to any extension pursuant to
SECTION 1.10 of the Agreement (it being understood that if any such Purchaser
does not extend its Commitment hereunder then the Purchase Limit shall be
reduced ratably with respect to the Purchasers in each Purchaser Group by an
amount equal to the Commitment of such Exiting Purchaser and the Commitment
Percentages and Group Commitments of the Purchasers within each Purchaser Group
shall be appropriately adjusted), (b) the date determined pursuant to SECTION
2.2 of the Agreement, (c) the date the Purchase Limit reduces to zero pursuant
to SECTION 1.1(b) of the Agreement and (d) a Purchaser Group Facility
Termination Date, if at such time there is only one Purchaser Group .
I-9
"Federal Funds Rate" means, for any day, the per annum rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)." If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal Funds Effective Rate." If
on any relevant day the appropriate rate is not yet published in either
H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be
the arithmetic mean as determined by the Administrator of the rates for the last
transaction in overnight Federal funds arranged before 9:00 a.m. (New York time)
on that day by each of three leading brokers of Federal funds transactions in
New York City selected by the Administrator.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any entity succeeding to any of its principal functions.
"Fees" means the fees payable by the Seller to each Purchaser Group
pursuant to the applicable Purchaser Group Fee Letter.
"GAAP" means the generally accepted accounting principles and practices in
the United States, consistently applied.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any body or entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including any court, and any Person owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Group A Obligor" means any Obligor with a short-term rating of at least:
(a) "A-1" by Standard & Poor's, or if such Obligor does not have a short-term
rating from Standard & Poor's, a rating of "A+" or better by Standard & Poor's
on its long-term senior unsecured and uncredit-enhanced debt securities, AND (b)
"P-1" by Moody's, or if such Obligor does not have a short-term rating from
▇▇▇▇▇'▇, "▇▇" or better by Moody's on its long-term senior unsecured and
uncredit-enhanced debt securities.
"Group B Obligor" means an Obligor, not a Group A Obligor, with a
short-term rating of at least: (a) "A-2" by Standard & Poor's, or if such
Obligor does not have a short-term rating from Standard & Poor's, a rating of
"BBB+" to "A" by Standard & Poor's on its long-term senior unsecured and
uncredit-enhanced debt securities, AND (b) "P-2" by Moody's, or if such Obligor
does not have a short-term rating from Moody's, "Baa1" to "A2" by Moody's on its
long-term senior unsecured and uncredit-enhanced debt securities.
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"Group C Obligor" means an Obligor, not a Group A Obligor or a Group B
Obligor, with a short-term rating of at least: (a) "A-3" by Standard & Poor's,
or if such Obligor does not have a short-term rating from Standard & Poor's, a
rating of "BBB-" to "BBB" by Standard & Poor's on its long-term senior unsecured
and uncredit-enhanced debt securities, AND (b) "P-3" by Moody's, or if such
Obligor does not have a short-term rating from Moody's, "Baa3" to "Baa2" by
Moody's on its long-term senior unsecured and uncredit-enhanced debt securities.
"Group D Obligor" means any Obligor that is not a Group A Obligor, Group B
Obligor or Group C Obligor.
"Group Commitment" means with respect to any Purchaser Group the aggregate
of the Commitments of each Purchaser within such Purchaser Group.
"Group Investment" means with respect to any Purchaser Group, an amount
equal to the aggregate of all Investments of the Purchasers within such
Purchaser Group.
"Increased Costs" means the amounts payable by Seller to any Affected
Person pursuant to SECTIONS 1.7 and 1.8 of the Agreement.
"Indemnified Amounts" has the meaning set forth in SECTION 3.1 of the
Agreement.
"Indemnified Party" has the meaning set forth in SECTION 3.1 of the
Agreement.
"Independent Director" has the meaning set forth in PARAGRAPH 3(c) of
EXHIBIT IV to the Agreement.
"Information Package" means a report, in substantially the form of ANNEX A
to the Agreement, furnished to the Administrator pursuant to the Agreement.
"Insolvency Proceeding" means: (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors, in each case undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute of similar import, together with
the regulations thereunder, in each case as in effect from time to time.
References to sections of the Internal Revenue Code also refer to any successor
sections.
"Investment" means with respect to any Purchaser the amount paid to the
Seller by such Purchaser pursuant to the Agreement (as modified by any
assignment), in each case
I-11
reduced from time to time by Collections distributed and applied on account of
such Investment pursuant to SECTION 1.4 of the Agreement; provided, that if such
Investment shall have been reduced by any distribution and thereafter all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason, such Investment shall be increased by the amount of such rescinded or
returned distribution as though it had not been made.
"KU" has the meaning set forth in the preamble.
"KU Post Office Box" means, collectively, post office boxes # 14101 and #
14242, located in ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and in the name of the Seller.
"Legal Requirements" means any statute, rule, regulation or order of any
Governmental Authority.
"Liquidity Agent" means each of the banks acting as agent for the various
Liquidity Banks under each Liquidity Agreement.
"Liquidity Agreement" means any agreement entered into in connection with
this Agreement pursuant to which a Liquidity Provider agrees to make purchases
or advances to, or purchase assets from, any Conduit Purchaser in order to
provide liquidity for such Conduit Purchaser's Purchases.
"Liquidity Provider" means each bank or other financial institution that
provides liquidity support to any Conduit Purchaser pursuant to the terms of a
Liquidity Agreement.
"Lock-Box Account" means an account maintained at a bank or other financial
institution for the purpose of receiving Collections.
"Lock-Box Agreement" means (i) an agreement, among the Administrator, the
Seller, the Servicer and a Lock-Box Bank or (ii) an acknowledgment by the United
State Post Office that each of Servicer and the Administrator are authorized to
collect mail delivered to the KU Post Office Box.
"Lock-Box Bank" means (i) any of the banks or other financial institutions
holding one or more Lock-Box Accounts and (ii) Travelers.
"Loss Reserve" means, on any date, an amount equal to: (a) the Aggregate
Investment at the close of business of the Servicer on such date multiplied by
(b)(i) the Loss Reserve Percentage on such date divided by (ii) 100% minus the
Loss Reserve Percentage on such date.
"Loss Reserve Percentage" means, on any date, the greater of: (a) 10% or
(b) (i) the product of (A) 2 times the highest average of the Default Ratios for
any three consecutive calendar months during the twelve most recent calendar
months multiplied by (B) the
I-12
aggregate credit sales made by the Originator during the 3 most recent calendar
months divided by (ii) the aggregate Outstanding Balance of Eligible Receivables
as of such date.
"Majority Purchasers" means, at any time, Purchasers whose Commitments
aggregate 51% or more of the aggregate of the Commitments of all Purchasers.
"Market Street" has the meaning set forth in the preamble to the Agreement.
"Market Street Base Rate" means, in the case of Market Street or any
Purchaser in its Purchaser Group, for any day, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate shall be at all times
equal to the higher of:
(a) the rate of interest in effect for such day as publicly announced
from time to time by PNC in Pittsburgh, Pennsylvania as its "prime rate."
Such "prime rate" is set by PNC based upon various factors, including PNC's
costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be
priced at, above or below such announced rate, and
(b) 0.50% per annum above the latest Federal Funds Rate.
"Market Street CP Rate" means, with respect to Market Street for any Yield
Period with respect to any Portion of Investment, the per annum rate equivalent
to the "weighted average cost" (as defined below) related to the issuance of
Market Street's Notes that are allocated, in whole or in part, by Market Street
(or by its Purchaser Agent) to fund or maintain such Portion of Investment (and
which may also be allocated in part to the funding of other Portions of
Investment hereunder or of other assets of Market Street); PROVIDED, HOWEVER,
that if any component of such rate is a discount rate, in calculating the
"MARKET STREET CP RATE" for such Portion of Investment for such Yield Period,
Market Street shall for such component use the rate resulting from converting
such discount rate to an interest bearing equivalent rate per annum. As used in
this definition, Market Street's "WEIGHTED AVERAGE COST" shall consist of (x)
the actual interest rate (or discount) paid to purchasers of Market Street's
Notes, together with the commissions of placement agents and dealers in respect
of such Notes, to the extent such commissions are allocated, in whole or in
part, to such Notes by Market Street (or by its Purchaser Agent) and (y) any
incremental carrying costs incurred with respect to Market Street's Notes
maturing on dates other than those on which corresponding funds are received by
Market Street. Notwithstanding the foregoing, the "CP Rate" for any day while a
Termination Event or an Unmatured Termination Event exists shall be an interest
rate equal to 2% above the Base Rate in effect on such day.
"Market Street Yield Rate" for any Yield Period for any Portion of
Investment of the Purchased Interest in the case of Market Street or any
Purchaser in its Purchaser Group, means an interest rate per annum equal to: (a)
the rate set forth as the "Applicable Margin" in the Purchaser Group Fee Letter
relating to Market Street plus the Euro-Rate for such Yield
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Period, or (b) if requested by the Seller, the Market Street Base Rate for such
Yield Period; PROVIDED, HOWEVER, that in the case of:
(i) any Yield Period on or before the first day of which the
Administrator shall have been notified by any Purchaser or other Program
Support Provider that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or any central
bank or other Governmental Authority asserts that it is unlawful, for such
Person, to fund any Euro-Rate Portion of Investment (and such Person shall
not have subsequently notified the Administrator that such circumstances no
longer exist),
(ii) any Yield Period of one to (and including) 29 days,
(iii) any Yield Period as to which the Administrator does not receive
notice before noon (New York City time) on the third Business Day preceding
the first day of such Yield Period that the Seller desires that the related
Portion of Investment be a Euro-Rate Portion of Investment, or
(iv) any Yield Period relating to a Portion of Investment that is less
than $5,000,000,
the "Yield Rate" for each such Yield Period shall be an interest rate per annum
equal to the Market Street Base Rate in effect on each day of such Yield Period.
The "Yield Rate" for any day while a Termination Event exists shall be an
interest rate equal to 2% per annum above the applicable Base Rate in effect on
such day.
"Material Adverse Effect" means a material adverse effect on:
(a) the assets, operations, business or financial condition of
Servicer, Seller or the Originator,
(b) the ability of Servicer, Seller or the Originator to perform its
obligations under the Agreement or any other Transaction Document to which
it is a party,
(c) the validity or enforceability as to Servicer, Seller or the
Originator of any other Transaction Document, or the validity,
enforceability or collectibility of a material portion of the Pool
Receivables, or
(d) the status, perfection, enforceability or priority of any
Purchaser's or the Seller's interest in the Pool Assets.
(e) the terms and conditions applicable to a material portion of the
Pool Receivables.
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"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Net Receivables Pool Balance" means, at any time: (a) the Outstanding
Balance of Eligible Receivables then in the Receivables Pool minus the sum of
(b) (i) the Excess Concentration, (ii) the EMPP Accumulator Balance, (iii) the
aggregate of all Security Deposits and, (iv) after the Energy Wholesale Addition
Date, the Energy Wholesale Payables.
"Notes" means short-term promissory notes issued, or to be issued, by each
Conduit Purchaser to fund its investments in accounts receivable or other
financial assets.
"Obligor" means, with respect to any Receivable, the Person obligated to
make payments pursuant to the Contract or applicable Legal Requirements relating
to such Receivable.
"Obligor Payment Plan" means, with respect to any Receivable, the agreement
(if any) between the Originator and the related Obligor providing for equal
monthly payments (subject to bi-annual adjustments related to the actual
consumption or cost of goods and services) in connection with such Receivable.
"Originator" has the meaning set forth in the Sale Agreement.
"Originator Assignment Certificate" means the assignment, in substantially
the form of EXHIBIT C to the Sale Agreement, evidencing Seller's ownership of
the Receivables generated by the Originator, as the same may be amended,
supplemented, amended and restated, or otherwise modified from time to time in
accordance with the Sale Agreement.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Payment Date" has the meaning set forth in SECTION 2.1 of the Sale
Agreement.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.
"Performance Reserve" means the sum of (a) the Loss Reserve and (b) the
Dilution Reserve.
"PNC" has the meaning set forth in the preamble to the Agreement.
"Pool Assets" has the meaning set forth in SECTION 1.2(d) of the Agreement.
"Pool Receivable" means a Receivable in the Receivables Pool.
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"Portion of Investment" means, with respect to any Purchaser and its
related Investment, the portion of such Investment being funded or maintained by
such Purchaser by reference to a particular interest rate basis.
"Program Support Agreement" means and includes any Liquidity Agreement and
any other agreement entered into by any Program Support Provider providing for:
(a) the issuance of one or more letters of credit for the account of any Conduit
Purchaser, (b) the issuance of one or more surety bonds for which the such
Conduit Purchaser is obligated to reimburse the applicable Program Support
Provider for any drawings thereunder, (c) the sale by such Conduit Purchaser to
any Program Support Provider of the Purchased Interest (or portions thereof)
maintained by such Conduit Purchaser and/or (d) the making of loans and/or other
extensions of credit to any Conduit Purchaser in connection with such Conduit
Purchaser's securitization program contemplated in the Agreement, together with
any letter of credit, surety bond or other instrument issued thereunder (but
excluding any discretionary advance facility provided by the Administrator).
"Program Support Provider" means and includes with respect to each Conduit
Purchaser any Liquidity Provider and any other Person (other than any customer
of such Conduit Purchaser) now or hereafter extending credit or having a
commitment to extend credit to or for the account of, or to make purchases from,
such Conduit Purchaser pursuant to any Program Support Agreement.
"Purchase" is defined in SECTION 1.1(a).
"Purchase and Sale Indemnified Amounts" has the meaning set forth in
SECTION 9.1 of the Sale Agreement.
"Purchase and Sale Indemnified Party" has the meaning set forth in SECTION
9.1 of the Sale Agreement.
"Purchase and Sale Termination Date" has the meaning set forth in SECTION
1.4 of the Sale Agreement.
"Purchase and Sale Termination Event" has the meaning set forth in SECTION
8.1 of the Sale Agreement.
"Purchase Date" means the date of which a Purchase or a reinvestment is
made pursuant to the Agreement.
"Purchase Facility" has the meaning set forth in SECTION 1.1 of the Sale
Agreement.
"Purchase Limit" means (i) $50,000,000, as such amount may be reduced
pursuant to SECTION 1.1(b) of the Agreement, decreased pursuant to SECTION 1.10
or increased pursuant to SECTION 1.2(e). References to the unused portion of the
Purchase Limit shall mean, at any time, the Purchase Limit minus the then
outstanding Aggregate Investment.
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"Purchase Price" has the meaning set forth in SECTION 2.1 of the Sale
Agreement.
"Purchase Report" has the meaning set forth in SECTION 2.1 of the Sale
Agreement.
"Purchased Interest" means, at any time, the undivided percentage ownership
interest in: (a) each and every Pool Receivable now existing or hereafter
arising, (b) all Related Security with respect to such Pool Receivables and (c)
all Collections with respect to, and other proceeds of, such Pool Receivables
and Related Security. Such undivided percentage interest shall be computed as:
Aggregate Investment + Total Reserves
-------------------------------------
Net Receivables Pool Balance
The Purchased Interest shall be determined from time to time pursuant to SECTION
1.3 of the Agreement.
"Purchaser" means each Conduit Purchaser and/or each Related Committed
Purchaser, as applicable.
"Purchaser Agent" means each Person acting as agent on behalf of a
Purchaser Group and designated as a Purchaser Agent for such Purchaser Group on
the signature pages to the Agreement or any other Person who becomes a party to
this Agreement as a Purchaser Agent pursuant to an Assumption Agreement.
"Purchaser Group" means, for each Conduit Purchaser, such Conduit
Purchaser, its Related Committed Purchasers (if any) and its related Purchaser
Agent.
"Purchaser Group Fee Letter" has the meaning set forth in SECTION 1.5 of
the Agreement.
"Purchaser Group Facility Termination Date" means, with respect to each
Purchaser Group: (a) the date that the commitments of all of the related
Liquidity Providers terminate under any related Liquidity Agreement, (b) the
date that the commitment of all of the Related Committed Purchasers of such
Purchaser Group terminate pursuant to SECTION 1.10 and (c) such Purchaser Group
shall fail to cause the amendment or modification of any Transaction Document or
related opinion as required by Moody's or Standard and Poor's, and such failure
shall continue for 30 days after such amendment is initially requested.
"Ratable Share" means, for each Purchaser Group, such Purchaser Group's
aggregate Commitments divided by the aggregate Commitments of all Purchaser
Groups.
"Receivable" means any indebtedness and other obligations owed to the
Seller or the Originator by, or any right of the Seller or the Originator to
payment from or on behalf of, an Obligor (not including an Obligor who is an
Affiliate of the Originator), whether constituting
I-17
an account, chattel paper, instrument or general intangible, arising in
connection with the sale of goods or the rendering of services in the ordinary
course of business by the Originator, and includes the obligation to pay any
finance charges, fees and other charges with respect thereto; PROVIDED, HOWEVER
that until the Energy Wholesale Addition Date no obligation that would otherwise
constitute a Receivable arising under an Energy Wholesale Contract shall
constitute a Receivable. Indebtedness and other obligations arising from any one
transaction, including indebtedness and other obligations represented by an
individual invoice or agreement, shall constitute a Receivable separate from a
Receivable consisting of the indebtedness and other obligations arising from any
other transaction.
"Receivables Pool" means, at any time, all of the then outstanding
Receivables purchased by the Seller pursuant to the Sale Agreement prior to the
Facility Termination Date.
"Related Committed Purchaser" means each Person listed as such (and its
respective Commitment) for each Conduit Purchaser as set forth on the signature
pages of the Agreement or in any Assumption Agreement or Transfer Supplement.
"Related Rights" has the meaning set forth in SECTION 1.1 of the Sale
Agreement.
"Related Security" means, with respect to any Receivable:
(a) all of the Seller's and the Originator's interest in any goods
(including returned goods), and documentation of title evidencing the
shipment or storage of any goods (including returned goods), relating to
any sale giving rise to such Receivable,
(b) all instruments and chattel paper that may evidence such
Receivable,
(c) all other security interests or liens and property subject thereto
from time to time purporting to secure payment of such Receivable, whether
pursuant to the Contract or applicable Legal Requirements related to such
Receivable or otherwise, together with all UCC financing statements or
similar filings relating thereto, and
(d) all of the Seller's and the Originator's rights, interests and
claims under the Contracts or applicable Legal Requirements and all
guaranties, indemnities, insurance and other agreements (including the
related Contract) or arrangements of whatever character from time to time
supporting or securing payment of such Receivable or otherwise relating to
such Receivable, whether pursuant to the Contract or applicable Legal
Requirements related to such Receivable or otherwise.
"Sale Agreement" means the Purchase and Sale Agreement, dated as of
February 6, 2001, among the Seller, the Originator and the Servicer as amended
through the date of the Agreement and as such agreement may be amended, amended
and restated, supplemented or otherwise modified from time to time.
I-18
"SEC Reports" means the reports filed by the Originator with the Securities
and Exchange Commission on Form 10-K, Form 10-Q and/or Form 8-K (or any
successor Form(s) to any thereof).
"Security Deposit" means, for any Receivable, any payment paid or payable
by the related Obligor to the Originator representing security for future
payments by such Obligor on such Receivable.
"Seller" has the meaning set forth in the preamble to the Agreement.
"Seller's Share" of any amount means the greater of: (a) $0 and (b) such
amount minus the product of (i) such amount multiplied by (ii) the Purchased
Interest.
"Servicer" has the meaning set forth in the preamble to the Agreement.
"Servicing Fee" shall mean the fee referred to in SECTION 4.6 of the
Agreement.
"Servicing Fee Rate" shall mean the rate referred to in SECTION 4.6 of the
Agreement.
"Settlement Date" means the 16th day of each calendar month or if such day
is not a Business Day, the next succeeding Business Day.
"Significant Subsidiary" shall have the meaning given to such term in
Regulation S-X of the Securities and Exchange Commission.
"Solvent" means, with respect to any Person at any time, a condition under
which:
(i) the fair value and present fair saleable value of such Person's
total assets is, on the date of determination, greater than such Person's
total liabilities (including contingent and unliquidated liabilities) at
such time;
(ii) the fair value and present fair saleable value of such Person's
assets is greater than the amount that will be required to pay such
Person's probable liability on its existing debts as they become absolute
and matured ("DEBTS," for this purpose, includes all legal liabilities,
whether matured or unmatured, liquidated or unliquidated, absolute, fixed,
or contingent);
(iii) such Person is and shall continue to be able to pay all of its
liabilities as such liabilities mature; and
(iv) such Person does not have unreasonably small capital with which
to engage in its current and in its anticipated business.
For purposes of this definition:
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(A) the amount of a Person's contingent or unliquidated liabilities at
any time shall be that amount which, in light of all the facts and
circumstances then existing, represents the amount which can reasonably be
expected to become an actual or matured liability;
(B) the "fair value" of an asset shall be the amount which may be
realized within a reasonable time either through collection or sale of such
asset at its regular market value;
(C) the "regular market value" of an asset shall be the amount which a
capable and diligent business person could obtain for such asset from an
interested buyer who is willing to Purchase such asset under ordinary
selling conditions; and
(D) the "present fair saleable value" of an asset means the amount
which can be obtained if such asset is sold with reasonable promptness in
an arm's-length transaction in an existing and not theoretical market.
"Standard & Poor's" means Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc.
"Subservicer" means LG&E Energy Services Inc.
"Subsidiary" means, as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock of each class or
other interests having ordinary voting power (other than stock or other
interests having such power only by reason of the happening of a contingency) to
elect a majority of the Board of Directors or other managers of such entity are
at the time owned, or management of which is otherwise controlled: (a) by such
Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and
one or more Subsidiaries of such Person.
"Tangible Net Worth" means, with respect to any Person, the tangible net
worth of such Person as determined in accordance with GAAP.
"Termination Day" means: (a) each day on which the conditions set forth in
SECTION 2 of EXHIBIT II to the Agreement are not satisfied or (b) each day that
occurs on or after the Facility Termination Date.
"Termination Event" has the meaning specified in EXHIBIT V to the
Agreement.
"Termination Fee" means, for any Yield Period, with respect to any
Purchaser, the amount, if any, by which: (a) the additional Discount related to
such Purchaser's Investment (calculated without taking into account any
Termination Fee or any shortened duration of such Yield Period) that would have
accrued during such Yield Period on the reductions of Investment relating to
such Yield Period had such reductions not been made, exceeds (b) the income, if
any, received by such Purchaser from investing the proceeds of such reductions
of
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Investment, as determined by the such Purchaser's Purchaser Agent, which
determination shall be binding and conclusive for all purposes, absent manifest
error.
"Total Reserves" means, at any time the sum of : the Yield Reserve, plus
the Performance Reserve.
"Transaction Documents" means the Agreement, the Lock-Box Agreements, each
Purchaser Group Fee Letter, the Sale Agreement and all other certificates,
instruments, UCC financing statements, reports, notices, agreements and
documents executed or delivered under or in connection with the Agreement, in
each case as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the Agreement.
"Transfer Supplement" has the respective meanings set forth in SECTIONS
6.3(c) and 6.3(e).
"Travelers" means Traveler's Express Company, Inc.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the applicable jurisdiction.
"Unmatured Purchase and Sale Termination Event" means any event which, with
the giving of notice or lapse of time, or both, would become a Purchase and Sale
Termination Event.
"Unmatured Termination Event" means an event that, with the giving of
notice or lapse of time, or both, would constitute a Termination Event.
"Yield Period" means, with respect to each Portion of Investment: (a)
before the Facility Termination Date: (i) initially the period commencing on the
date of the initial Purchase pursuant to SECTION 1.2 of the Agreement (or in the
case of any fees payable hereunder, commencing on the Closing Date) and ending
on (but not including) the next Settlement Date, and (ii) thereafter, each
period commencing on such Settlement Date and ending on (but not including) the
next Settlement Date, and (b) on and after the Facility Termination Date: such
period (including a period of one day) as shall be selected from time to time by
the Administrator or, in the absence of any such selection, each period of 30
days from the last day of the preceding Yield Period.
"Yield Rate" for any Yield Period for any Portion of Investment of the
Purchased Interest (i) in the case of the Purchaser Group including Market
Street, means the Market Street Yield Rate and (ii) in the case of each of other
Purchaser Group shall mean the rate set forth as the Yield Rate for such
Purchaser Group in the related Purchaser Group Fee Letter.
"Yield Reserve" means, on any date, an amount equal to: (a) the Aggregate
Investment at the close of business of the Servicer on such date multiplied by
(b)(i) the Yield
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Reserve Percentage on such date divided by (ii) 100% minus the Yield Reserve
Percentage on such date.
"Yield Reserve Percentage" means at any time:
(BR + SFR) x 1.5 x DSO
---------
360
where:
BR = the Market Street Base Rate for the most recent Yield
Period,
DSO = the Days Sales Outstanding, and
SFR = the Servicing Fee Rate
OTHER TERMS. All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All terms
used in Article 9 of the UCC in the State of New York, and not specifically
defined herein, are used herein as defined in such Article 9. Unless the context
otherwise requires, "or" means "and/or," and "including" (and with correlative
meaning "include" and "includes") means including without limiting the
generality of any description preceding such term.
I-22
II-3
EXHIBIT II
CONDITIONS OF PURCHASES
1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial Purchase under
this Agreement is subject to the following conditions precedent that
the Administrator and each Purchaser Agent shall have received on or
before the date of such Purchase, each in form and substance
(including the date thereof) satisfactory to the Administrator and
each Purchaser Agent:
(a) A counterpart of the Agreement and the other Transaction Documents
executed by the parties thereto.
(b) Certified copies of: (i) the resolutions of the Board of Directors or
the Board of Managers (as appropriate) of each of the Seller and the Originator
authorizing the execution, delivery and performance by the Seller and the
Originator, as the case may be, of the Agreement and the other Transaction
Documents to which it is a party; (ii) all documents evidencing other necessary
organizational or corporate action and governmental approvals, if any, with
respect to the Agreement and the other Transaction Documents and (iii) the
certificate of incorporation and by-laws or the limited liability company
agreement, as appropriate of the Seller and the Originator.
(c) A certificate of the Secretary or Assistant Secretary of the Seller and
the Originator certifying the names and true signatures of its officers who are
authorized to sign the Agreement and the other Transaction Documents. Until the
Administrator and each Purchaser Agent receives a subsequent incumbency
certificate from the Seller and the Originator, as the case may be, the
Administrator and each Purchaser Agent shall be entitled to rely on the last
such certificate delivered to it by the Seller and the Originator, as the case
may be.
(d) Proper financing statements, executed and suitable for filing under the
UCC of all jurisdictions that the Administrator may deem necessary or desirable
in order to perfect the interests of the Seller, the Originator and the
Administrator (on behalf of each Purchaser Group) contemplated by the Agreement
and the Sale Agreement.
(e) Executed copies of proper financing statements, if any, suitable for
filing under the UCC of all jurisdictions that the Administrator may deem
necessary or desirable in order to release all security interests and other
rights of any Person in the Receivables, Contracts or Related Security
previously granted by the Originator or the Seller.
(f) Completed UCC search reports, dated on or shortly before the date of
the initial purchase hereunder, listing the financing statements filed in all
applicable jurisdictions referred to in SUBSECTION (e) above that name the
Originator or the Seller as debtor, together with copies of such other financing
statements, and similar search reports with respect to judgment liens, federal
tax liens and liens of the Pension Benefit Guaranty Corporation in
II-1
such jurisdictions, as the Administrator or any Purchaser Agent may request,
showing no Adverse Claims on any Pool Assets.
(g) (i) By the 30th day following the Closing Date, copies of executed
Lock-Box Agreements with each Lock-Box Bank that is not a Community Bank and
(ii) a certificate from an authorized officer of the Originator to the effect
that the name of the renter of the KU Post Office Box has been changed to the
name of the Seller.
(h) Favorable opinions, in form and substance reasonably satisfactory to
the Administrator and each Purchaser Agent, of ▇▇▇▇▇▇▇, Carton & Douglas, Ogden,
▇▇▇▇▇▇ & ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇, counsel for the Seller, the Originator, and
the Servicer.
(i) Satisfactory results of a review and audit (performed by
representatives of the Administrator) of the Servicer's collection, operating
and reporting systems, the Credit and Collection Policy of the Originator,
historical receivables data and accounts, including satisfactory results of a
review of the Servicer's operating location(s) and satisfactory review and
approval of the Eligible Receivables in existence on the date of the initial
purchase under the Agreement.
(j) A pro forma Information Package representing the performance of the
Receivables Pool for the calendar month ending December 31, 2000.
(k) Evidence of payment by the Seller of all accrued and unpaid fees
(including those contemplated by each Purchaser Group Fee Letter), costs and
expenses to the extent then due and payable on the date thereof, including any
such costs, fees and expenses arising under or referenced in SECTION 6.4 of the
Agreement and the Fee Letter.
(l) Each Purchaser Group Fee Letter (received only by the related Purchaser
Group Agent) duly executed by the Seller.
(m) Good standing certificates with respect to each of the Seller, the
Originator and the Servicer issued by the Secretary of State (or similar
official) of the state of each such Person's organization and principal place of
business.
(n) To the extent required by each Conduit Purchaser's commercial paper
program, letters from each of the rating agencies then rating the Notes
confirming the rating of such Notes after giving effect to the transaction
contemplated by the Agreement.
(o) Each Liquidity Agreement (received only by the related Purchaser Group
Agent) and all other Transaction Documents duly executed by the parties thereto.
(p) A computer file containing all information with respect to the
Receivables as the Administrator or any Purchaser Agent may reasonably request.
II-2
(q) Such other approvals, opinions or documents as the Administrator or any
Purchaser Agent may reasonably request.
2. CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS. Each Purchase
(including the initial Purchase) and each reinvestment shall be subject to
the further conditions precedent that:
(a) in the case of each purchase, the Servicer shall have delivered to the
Administrator and each Purchaser Agent on or before such purchase, in form and
substance satisfactory to the Administrator and such Purchaser Agent, a
completed pro forma Information Package to reflect the level of Investment and a
completed purchase notice in the form of ANNEX B (a "Purchase Notice") with
respect to each Purchaser Group and related reserves after such subsequent
purchase; and
(b) on the date of such purchase or reinvestment the following statements
shall be true (and acceptance of the proceeds of such purchase or reinvestment
shall be deemed a representation and warranty by the Seller that such statements
are then true):
(i) the representations and warranties contained in EXHIBIT III to the
Agreement are true and correct in all material respects on and as of the
date of such purchase or reinvestment as though made on and as of such date
except to the extent it specifically related to a prior date; and
(ii) no event has occurred and is continuing, or would result from
such purchase or reinvestment, that constitutes a Termination Event or an
Unmatured Termination Event.
II-3
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
1. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents and
warrants as follows:
(a) The Seller is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is
duly qualified to do business and is in good standing as a foreign limited
liability company in every jurisdiction where the nature of its business
requires it to be so qualified, except where the failure to be so qualified
would not have a Material Adverse Effect.
(b) The execution, delivery and performance by the Seller of the Agreement
and the other Transaction Documents to which it is a party, including its use of
the proceeds of purchases and reinvestments: (i) are within its organizational
powers; (ii) have been duly authorized by all necessary organizational action;
(iii) do not contravene or result in a default under or conflict with: (A) its
certificate of formation, limited liability company agreement or any other
organizational documents of the Seller, (B) any Legal Requirement applicable to
it, (C) any indenture, loan agreement, mortgage, deed of trust or other material
agreement or instrument to which it is a party or by which it is bound, or (D)
any order, writ, judgment, award, injunction or decree binding on or affecting
it or any of its property; and (iv) do not result in or require the creation of
any Adverse Claim upon or with respect to any of its properties. The Agreement
and the other Transaction Documents to which it is a party have been duly
executed and delivered by the Seller.
(c) Except for the filing of the UCC Financing Statements referred to in
SECTION 1(d) of EXHIBIT II to the Agreement, no authorization, approval or other
action by, and no notice to or filing with, any Governmental Authority or other
Person is required for the due execution, delivery and performance by Seller of
this Agreement or any other Transaction Document to which it is a party that has
not been made, filed or obtained.
(d) Each of the Agreement and the other Transaction Documents to which the
Seller is a party constitutes its legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws from time to time in effect affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) There is no pending or, to Seller's best knowledge, threatened action
or proceeding before any Governmental Authority or arbitrator affecting Seller
or any of its properties (except for proceedings approving the transactions
contemplated by the Transaction Documents).
III-1
(f) No proceeds of any purchase or reinvestment will be used to acquire any
equity security of a class that is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
(g) The Seller is the legal and beneficial owner of the Pool Receivables
and Related Security, free and clear of any Adverse Claim. Upon each purchase or
reinvestment, Administrator (for the benefit of each Purchaser) shall acquire a
valid and enforceable perfected undivided percentage ownership or security
interest, to the extent of the Purchased Interest, in each Pool Receivable then
existing or thereafter arising and in the Related Security, Collections and
other proceeds with respect thereto, free and clear of any Adverse Claim. The
Agreement creates a security interest in favor of the Administrator (for the
benefit of each Purchaser) in the Pool Assets, and the Administrator (for the
benefit of each Purchaser) has a first priority perfected security interest in
the Pool Assets, free and clear of any Adverse Claims. No effective financing
statement or other instrument similar in effect covering any Pool Asset is on
file in any recording office, except those filed in favor of the Seller pursuant
to the Sale Agreement and the Administrator (for the benefit of each Purchaser)
relating to the Agreement, or in respect of which the Administrator has received
executed copies of proper financing statements releasing or terminating, as
applicable, all security interests and other rights of any Person in such Pool
Asset.
(h) Each Information Package (if prepared by the Seller or one of its
Affiliates, or to the extent that information contained therein is supplied by
the Seller or an Affiliate), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Administrator or any Purchaser Agent in
connection with the Agreement or any other Transaction Document to which it is a
party is or will be complete and accurate in all material respects as of its
date or as of the date so furnished, and does not and will not contain any
material misstatement of fact or omit to state a material fact or any fact
necessary to make the statements contained therein not misleading.
(i) The Seller's principal place of business and chief executive office (as
such terms are used in the UCC) and the office where it keeps its records
concerning the Receivables are located at the address referred to in SECTIONS
1(b) of EXHIBIT IV to the Agreement.
(j) The names and addresses of all the Lock-Box Banks, together with the
account numbers of the Lock-Box Accounts (if any) at such Lock-Box Banks and the
number and location of the KU Post-Office Box, are specified in SCHEDULE II to
the Agreement (or have been identified in a notice to the Administrator in
accordance with the Agreement) and, from and after the 30th day following the
Closing Date, all Lock-Box Accounts (other than Lock-Box Accounts maintained at
Community Banks) are or will be subject to (and Travelers is or will be a party
to) Lock-Box Agreements (except as otherwise agreed to in writing by the
Administrator). Twenty-one days after the Administrator's written request and at
all times thereafter, the KU Post-Office Box shall be subject to a Lock-Box
Agreement. Seller has not granted to any Person, other than the Administrator or
Servicer as
III-2
contemplated by the Agreement, dominion and control of any Lock-Box Account or
the KU Post-Office Box, or to any person other than the Administrator the right
to take dominion and control of any such account or post office box or
Collections deposited with Travelers at a future time or upon the occurrence of
a future event.
(k) The Seller is not in violation of any order of any court or arbitrator
or, in any material respect, in violation of any order of any Governmental
Authority.
(l) Neither the Seller nor any of its Affiliates has any direct or indirect
ownership or other financial interest in any Purchaser.
(m) No proceeds of any purchase or reinvestment will be used for any
purpose that violates any applicable Legal Requirement, including Regulations T,
U or X of the Federal Reserve Board.
(n) Each Pool Receivable included as an Eligible Receivable in the
calculation of the Net Receivables Pool Balance is an Eligible Receivable.
(o) No event has occurred and is continuing that constitutes a Termination
Event or an Unmatured Termination Event and no event would result from a
purchase in respect of, or reinvestment in respect of, the Purchased Interest or
from the application of the proceeds therefrom that constitutes a Termination
Event or an Unmatured Termination Event.
(p) [Reserved]
(q) The Seller and its Affiliates have complied in all material respects
with the Credit and Collection Policy and applicable Legal Requirements with
regard to each Receivable.
(r) The Seller has complied in all material respects with all of the terms,
covenants and agreements contained in the Agreement and the other Transaction
Documents that are applicable to it and all Legal Requirements that are
applicable to it.
(s) The Seller's complete organizational name is set forth in the preamble
to the Agreement, and it does not use and has not during the last six years used
any other organizational name, trade name, doing-business name or fictitious
name, except as set forth on SCHEDULE III to the Agreement and except for names
first used after the date of the Agreement and set forth in a notice delivered
to the Administrator pursuant to SECTION 1(k)(iv) of EXHIBIT IV to the
Agreement.
(t) The Seller is not an "investment company," or a company "controlled" by
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
III-3
(u) With respect to each Receivable transferred to the Seller under the
Sale Agreement, Seller has given reasonably equivalent value to the Originator
in consideration therefor and such transfer was not made for or on account of an
antecedent debt. No transfer by the Originator of any Receivable under the Sale
Agreement is or may be voidable under any section of the Bankruptcy Code.
(v) Pursuant to each Contract with respect to each Receivable or applicable
Legal Requirements, such Receivable is a legal, valid and binding obligation of
the related Obligor to pay the Outstanding Balance of the Receivable created
thereunder and any accrued interest thereon, enforceable against the Obligor in
accordance with its terms, except as such enforcement may be limited by
applicable Legal Requirements or applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law).
(w) Since its most recent financial report delivered hereunder, there has
been no change in the business, operations, financial condition, properties or
assets of the Seller which would have an effect of the type described in clauses
(b) through (e) of the definition of Material Adverse Effect or otherwise have a
material adverse effect on its ability to perform its obligations under the
Agreement or any other Transaction Document to which it is a party or materially
and adversely affect the transactions contemplated under the Agreement or such
other Transaction Documents.
(x) The Seller has complied in all material respects with the requirements,
rules and regulations of the Public Utility Holding Company Act of 1935, as
amended.
(y) The balance sheets of the Originator and its consolidated Subsidiaries
as at December 31, 1999, and the related statements of income and retained
earnings for the fiscal year then ended, copies of which have been furnished to
the Administrator and each Purchaser Agent, fairly present the financial
condition of the Originator and its consolidated Subsidiaries as at such date
and the results of the operations of the Originator and its Subsidiaries for the
period ended on such date, all in accordance with generally accepted accounting
principles consistently applied, and, since December 31, 1999 there has been no
event or circumstances which have an effect of the type described in clauses (b)
through (e) of the definition of Material Adverse Effect (other than those
disclosed in the SEC report prior to the Closing Date).
2. REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The Servicer represents
and warrants as follows:
(a) The Servicer is a corporation duly incorporated, validly existing and
in good standing under the laws of its state of organization, and is duly
qualified to do business and is in good standing as a foreign corporation in
every jurisdiction where the nature of its business requires it to be so
qualified, except where the failure to be so qualified would not have a Material
Adverse Effect.
III-4
(b) The execution, delivery and performance by the Servicer of the
Agreement and the other Transaction Documents to which it is a party: (i) are
within its corporate powers; (ii) have been duly authorized by all necessary
corporate action; (iii) do not contravene or result in a default under or
conflict with: (A) its charter or by-laws or (B) any indenture, loan agreement,
mortgage, deed of trust or other material agreement or instrument to which it is
a party or by which it is bound; (iv) do not in any material respect contravene
or conflict with: (A) any Legal Requirement applicable to it, or (B) any order,
writ, judgment, award, injunction or decree binding on or affecting it or any of
its property; and (v) do not result in or require the creation of any material
Adverse Claim upon or with respect to any of its properties. The Agreement and
the other Transaction Documents to which the Servicer is a party have been duly
executed and delivered by the Servicer.
(c) Except for the filing of the UCC Financing Statements referred to in
SECTION 1(d) of EXHIBIT II(d), no authorization, approval or other action by,
and no notice to or filing with, any Governmental Authority or other Person is
required for the due execution, delivery and performance by Servicer of this
Agreement or any other Transaction Document to which it is a party that has not
been made, filed or obtained.
(d) Each of the Agreement and the other Transaction Documents (if any) to
which Servicer is a party constitutes the legal, valid and binding obligation of
Servicer enforceable against Servicer in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws from time to time in effect affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) [Reserved]
(f) Except as disclosed in the SEC Reports (if any) or as otherwise
disclosed to the Administrator and each Purchaser Agent, there is no pending or,
to its best knowledge, threatened action or proceeding affecting Servicer before
any Governmental Authority or arbitrator that could have an effect of the type
described in clauses (b) through (e) of the definition of Material Adverse
Effect.
(g) No proceeds of any purchase or reinvestment will be used to acquire any
equity security of a class that is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
(h) Each Information Package (if prepared by Servicer or one of its
Affiliates, or to the extent that information contained therein is supplied by
Servicer or an Affiliate of Servicer), information, exhibit, financial
statement, document, book, record or report furnished or to be furnished at any
time by or on behalf of the Servicer to the Administrator, any Purchaser or any
Purchaser Agent in connection with the Agreement is or will be complete and
accurate in all material respects as of its date or as of the date so furnished
and
III-5
does not and will not contain any material misstatement of fact or omit to
state a material fact or any fact necessary to make the statements contained
therein not misleading.
(i) The Servicer is not in violation of any order of any court, arbitrator
or Governmental Authority, which could have a Material Adverse Effect.
(j) The Servicer has complied in all material respects with the Credit and
Collection Policy and applicable Legal Requirements with regard to each
Receivable.
(k) Neither the Servicer nor any of its Affiliates has any direct or
indirect ownership or other financial interests in any Purchaser.
(l) The Servicer has complied in all material respects with all of the
terms, covenants and agreements contained in the Agreement and the other
Transaction Documents that are applicable to it.
(m) The Servicer is not an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(n) Except as disclosed in the SEC Reports or otherwise disclosed to the
Administrator and each Purchaser Agent, there has been no change in the
business, operations, financial condition, properties or assets of the Servicer
which would have an effect of the type described in clauses (b) through (e) of
the definition of Material Adverse Effect or materially and adversely affect the
transactions contemplated under the Agreement or the other Transaction
Documents.
(o) Servicer has, to the extent applicable, complied in all material
respects with the requirements, rules and regulations of the Public Utility
Holding Company Act of 1935, as amended.
III-6
EXHIBIT IV
COVENANTS
1. COVENANTS OF THE SELLER. Until the latest of the Facility Termination
Date, the date on which no Investment of or Discount in respect of the Purchased
Interest shall be outstanding or the date all other amounts owed by the Seller
under the Agreement to any Purchaser, Purchaser Agent, the Administrator and any
other Indemnified Party or Affected Person shall be paid in full:
(a) COMPLIANCE WITH LAWS, ETC. The Seller shall comply with all applicable
Legal Requirements, and preserve and maintain its organizational existence,
rights, franchises, qualifications and privileges, except to the extent that the
failure so to comply with such Legal Requirements or the failure so to preserve
and maintain such rights, franchises, qualifications and privileges would not
have a Material Adverse Effect.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT, ETC. The Seller: (i) shall keep
its principal place of business and chief executive office (as such terms or
similar terms are used in the UCC) and the office where it keeps its records
concerning the Receivables at the address of the Seller set forth under its name
on the signature page to the Agreement or, pursuant to CLAUSE (k)(iv) below, at
any other locations in jurisdictions where all actions reasonably requested by
the Administrator to protect and perfect the interest of the Administrator (for
the benefit of the Purchasers) in the Receivables and related items (including
the Pool Assets) have been taken and completed and (ii) shall provide the
Administrator with at least 30 days' written notice before making any change in
the Seller's name or making any other change in the Seller's identity or
organizational structure (including a Change in Control) that could render any
UCC financing statement filed in connection with this Agreement "seriously
misleading" as such term (or similar term) is used in the UCC; each notice to
the Administrator pursuant to this sentence shall set forth the applicable
change and the effective date thereof. The Seller also will maintain and
implement administrative and operating procedures (including an ability to
recreate records evidencing Receivables and related Contracts in the event of
the destruction of the originals thereof), and keep and maintain all documents,
books, records, computer tapes and disks and other information reasonably
necessary or advisable for the collection of all Receivables (including records
adequate to permit the daily identification of each Receivable and all
Collections of and adjustments to each existing Receivable). The Seller will
(and will cause the Originator to) on or prior to the date of the Agreement,
▇▇▇▇ its master data processing records and other books and records relating to
the Purchased Interest (and at all times thereafter (until the latest of the
Facility Termination Date or the date all other amounts owed by the Seller under
the Agreement shall be paid in full) continue to maintain such records) with a
legend, acceptable to the Administrator, describing the Purchased Interest.
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND COLLECTION
POLICY. The Seller shall, at its expense, timely and fully perform and comply
with all material provisions, covenants and other promises required to be
observed by it under the Contracts or
IV-1
applicable Legal Requirements related to the Receivables, and timely and
fully comply in all material respects with the applicable Credit and Collection
Policies with regard to each Receivable and the related Contract or applicable
Legal Requirements.
(d) OWNERSHIP INTEREST, ETC. The Seller shall (and shall cause the Servicer
to), at its expense, take all action necessary or desirable to establish and
maintain a valid and enforceable undivided percentage ownership or security
interest, to the extent of the Purchased Interest, in the Pool Receivables, the
Related Security and Collections with respect thereto, and a first priority
perfected security interest in the Pool Assets, in each case free and clear of
any Adverse Claim, in favor of the Administrator (for the benefit of the
Purchasers), including taking such action to perfect, protect or more fully
evidence the interest of the Administrator (for the benefit of the Purchasers)
as the Administrator, may reasonably request.
(e) SALES, LIENS, ETC. The Seller shall not sell, assign (by operation of
law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, any or all of its right, title or
interest in, to or under any Pool Assets (including the Seller's undivided
interest in any Receivable, Related Security or Collections, or upon or with
respect to any account to which any Collections of any Receivables are sent), or
assign any right to receive income in respect of any items contemplated by this
paragraph.
(f) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as otherwise required by
applicable Legal Requirements or otherwise permitted under the Agreement, the
Seller shall not, and shall not permit the Originator or any of its Affiliates
to, extend the maturity or adjust the Outstanding Balance or otherwise modify
the terms of any Pool Receivable, or amend, modify or waive any term or
condition of any related Contract or waive any right granted to the Seller by an
applicable Legal Requirement.
(g) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Except as required
by applicable Legal Requirements, the Seller shall not make (or permit the
Originator to make) any change in the character of its business or in any Credit
and Collection Policy, or any change in any Credit and Collection Policy that
would have a material adverse effect with respect to the Receivables. The Seller
shall not make (or permit the Originator to make) any other material change in
the Credit and Collection Policy without giving prior written notice thereof to
the Administrator and each Purchaser Agent.
(h) AUDITS. The Seller shall (and shall cause the Originator to), from time
to time during regular business hours, but no more frequently than annually
unless (x) a Termination Event or Unmatured Termination Event has occurred and
is continuing or (y) in the opinion of the Administrator (with the consent or at
the direction of the Majority Purchasers) reasonable grounds for insecurity
exist with respect to the collectibility of a material portion of the Pool
Receivables or with respect to the Seller's performance or ability to perform in
any material respect its obligations under the Agreement, as reasonably
requested in advance (unless a Termination Event or Unmatured Termination Event
exists) by the Administrator, permit the Administrator, or its agents or
representatives: (i) to examine and make copies of
IV-2
and abstracts from all books, records and documents (including computer
tapes and disks) in the possession or under the control of the Seller (or the
Originator) relating to Receivables and the Related Security, including the
related Contracts, and (ii) to visit the offices and properties of the Seller
and the Originator for the purpose of examining such materials described in
CLAUSE (I) above, and to discuss matters relating to Receivables and the Related
Security or the Seller's or the Originator's performance under the Transaction
Documents or under the Contracts or applicable Legal Requirements with any of
the officers, employees, agents or contractors of the Seller or the Originator
having knowledge of such matters and (iii) without limiting the CLAUSES (i) and
(ii) above, to engage certified public accountants or other auditors acceptable
to the Seller and the Administrator to conduct at the Seller's expense, a review
of the Seller's books and records with respect to the Receivables.
(i) CHANGE IN LOCK-BOX BANKS, LOCK-BOX ACCOUNTS AND PAYMENT INSTRUCTIONS TO
OBLIGORS. The Seller shall not, and shall not permit the Originator to, add or
terminate any bank or other entity as a Lock-Box Bank or any account as a
Lock-Box Account from those listed in SCHEDULE II to the Agreement, make any
change to the KU Post Office Box, make any change in its instructions to
Obligors regarding payments to be made to the Seller, the Servicer, Travelers or
any Lock-Box Account (or related post office box or the KU Post Office Box),
make any change in its instructions to Travelers regarding the handling of
Collections or make any changes in its procedures for processing Collections
received in the KU Post Office Box, unless the Administrator and the Majority
Purchasers shall have consented thereto (which consent shall not be unreasonably
withheld, conditioned or delayed) in writing and the Administrator shall have
received copies of all agreements and documents (including Lock-Box Agreements)
that it may reasonably request in connection therewith.
(j) DEPOSITS TO LOCK-BOX ACCOUNTS. The Seller shall (or shall cause the
Originator or (for so long as KU is the Servicer) Servicer to): (i) instruct all
Obligors to make payments of all Receivables to one of the following: (A) one or
more Lock-Box Accounts or to post office boxes to which only Lock-Box Banks have
access (and shall instruct the Lock-Box Banks to cause all items and amounts
relating to such Receivables received in such post office boxes to be removed
and deposited into a Lock-Box Account on a daily basis), (B) the KU Post Office
Box and (C) Travelers payment centers (and shall instruct the Travelers to cause
all items and amounts relating to such Receivables received in such payment
centers to be removed and deposited into a Lock-Box Account within three days of
Traveler's receipt of such items and amounts); and (ii) deposit, or cause to be
deposited, any Collections received by it, the Servicer (for so long as KU is
the Servicer) or the Originator into Lock-Box Accounts not later than one
Business Day after receipt thereof and agrees that all such Collections shall be
deemed to be received in trust for the Purchasers and shall be set aside and
segregated until such transfer. Except as otherwise agreed to in writing by the
Administrator and the Majority Purchasers, 30 days after the Closing Date each
Lock-Box Account (other than Lock-Box Accounts maintained at Community Banks)
and (within twenty-one (21) days of the Administrator's written request to
Seller) the KU Post Office Box shall at all times be subject to, and Travelers
shall at all times be a party to, a Lock-Box Agreement. The Seller will not (and
will not permit the Servicer (for so long as KU is the
IV-3
Servicer) or the Originator to) deposit or otherwise credit, or cause or
permit to be so deposited or credited, to any Lock-Box Account or the KU Post
Office Box cash or cash proceeds other than Collections.
(k) REPORTING REQUIREMENTS. The Seller will provide to the Administrator
(in multiple copies, if requested by the Administrator) and each Purchaser Agent
the following:
(i) (A) as soon as available and in any event within 120 days after
the end of each fiscal year of the Seller, a copy of Seller's unaudited
financial statements for such year certified as to accuracy by the chief
financial officer or treasurer or any vice president of the Seller; (B) as
soon as available and in any event within 60 days after the end of the
first three quarters of each fiscal year of the Originator, balance sheets
of the Originator and its consolidated Subsidiaries as of the end of such
quarter and statements of income, retained earnings and cash flow of the
Originator and its consolidated Subsidiaries for the period commencing at
the end of the previous fiscal year and ending with the end of such
quarter, certified by the chief financial officer of such Person (which
information may be contained in the SEC Reports) and (C) as soon as
available and in any event within 120 days after the end of each fiscal
year of the Originator, a copy of the annual report for such year for the
Originator and its consolidated Subsidiaries, containing financial
statements for such year audited by independent certified public
accountants of nationally recognized standing (which information may be
contained in the SEC Reports);
(ii) as soon as possible and in any event within five days after the
occurrence of each Termination Event or Unmatured Termination Event, a
statement of the chief financial officer, treasurer or any vice president
of the Seller setting forth details of such Termination Event or Unmatured
Termination Event and the action that the Seller has taken and proposes to
take with respect thereto;
(iii) promptly after the filing or receiving thereof, copies of all
reports and notices that the Seller or any ERISA Affiliate files under
ERISA with the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or that the Seller or any ERISA
Affiliate receives from any of the foregoing or from any multiemployer plan
(within the meaning of Section 4001(a)(3) of ERISA) to which the Seller or
any of its ERISA Affiliates is or was, within the preceding five years, a
contributing employer, in each case in respect of the assessment of
withdrawal liability or an event or condition that could, in the aggregate,
result in the imposition of material liability on the Seller and/or any
such ERISA Affiliate;
(iv) at least thirty days before any change in the Seller's or the
Originator's name or any other change requiring the amendment of UCC
financing statements, a notice setting forth such changes and the effective
date thereof;
IV-4
(v) promptly after the Seller obtains knowledge thereof, notice of
any: (A) litigation, investigation or proceeding that may exist at any time
between the Seller, the Originator or any Affiliate thereof and any
Governmental Authority that, if not cured or if adversely determined, as
the case may be, would have a Material Adverse Effect, (B) material
litigation, investigation or proceeding that may exist at any time between
the Seller and any Person, (C) litigation or proceeding adversely affecting
the Originator or any of its Affiliates in which the amount involved is
$500,000 or more and not covered by insurance or in which injunctive or
similar relief is sought, (D) material litigation or proceeding relating to
any Transaction Document or (E) material adverse developments that have
occurred with respect to any previously disclosed litigation, proceedings
and investigations;
(vi) promptly after the occurrence thereof, notice of a material
adverse change in the business, operations, property or financial or other
condition of the Seller, the Originator, any Affiliate thereof and (to the
extent it has such information regarding the Servicer) the Servicer;
(vii) promptly after the sending or filing thereof, copies of all
reports that the Originator sends to any of its public security holders,
and copies of all reports and registration statements that the Originator
or any Subsidiary files with the Securities and Exchange Commission or any
national securities exchange; PROVIDED, that any filings with the
Securities and Exchange Commission that have been granted "confidential"
treatment shall be provided promptly after such filings have become
publicly available;
(viii) promptly after the occurrence thereof, notice of any downgrade
of the Originator;
(ix) promptly after the occurrence thereof, notice of any material
acquisition or investment by the Originator of or in any Person, business
or operation;
(x) promptly after the Seller obtains knowledge thereof, notice that
the percentage of Collections paid by Obligors in any calendar month
directly to the Originator (as opposed to payment to a Lock Box Account,
the KU Post Office Box or to a Travelers payment center) exceeded 5% of the
aggregate Collections in such calendar month;
(xi) promptly after the occurrence thereof, notice of any material
change to any Legal Requirement under which a Receivable arises; and
(xii) such other information respecting the Receivables or the
condition or operations, financial or otherwise, of the Seller or any of
its Affiliates as the Administrator or any Purchaser Agent may from time to
time reasonably request.
IV-5
(l) CERTAIN AGREEMENTS. Without the prior written consent of the
Administrator and the Majority Purchasers, the Seller will not (and will not
permit the Originator to) amend, modify, waive, revoke or terminate any
Transaction Document to which it is a party or any provision of Seller's
certificate of formation or limited liability company agreement.
(m) RESTRICTED PAYMENTS. (i) Except pursuant to CLAUSE (ii) below, the
Seller will not: (A) purchase or redeem any shares of its capital stock, (B)
declare or pay any dividend or set aside any funds for any such purpose, (C)
prepay, purchase or redeem any Debt, (D) lend or advance any funds or (E) repay
any loans or advances to, for or from any of its Affiliates (the amounts
described in CLAUSES (a) through (e) being referred to as "Restricted
Payments").
(ii) Subject to the limitations set forth in CLAUSE (iii) below, the
Seller may make Restricted Payments so long as such Restricted Payments are
made only in one or more of the following ways: (A) the Seller may make
cash payments (including prepayments) on the Company Note in accordance
with its terms, and (B) if no amounts are then outstanding under the
Company Note, the Seller may declare and pay dividends.
(iii) The Seller may make Restricted Payments only out of the funds it
receives pursuant to SECTIONS 1.4(b)(ii) and (iv) of the Agreement.
Furthermore, the Seller shall not pay, make or declare: (A) any dividend
if, after giving effect thereto, the Seller's tangible net worth would be
less than $5,000,000 or (B) any Restricted Payment (including any dividend)
if, after giving effect thereto, any Termination Event or Unmatured
Termination Event shall have occurred and be continuing.
(n) OTHER BUSINESS. The Seller will not: (i) engage in any business other
than the transactions contemplated by the Transaction Documents; (ii) create,
incur or permit to exist any Debt of any kind (or cause or permit to be issued
for its account any letters of credit or bankers' acceptances) other than
pursuant to this Agreement or the Company Note; or (iii) form any Subsidiary or
make any investments in any other Person; provided, however, that the Seller
shall be permitted to incur minimal obligations to the extent necessary for the
day-to-day operations of the Seller (such as expenses for stationery, audits,
maintenance of legal status, etc.).
(o) USE OF SELLER'S SHARE OF COLLECTIONS. The Seller shall apply the
Seller's Share of Collections to make payments in the following order of
priority: (i) the payment of its expenses (including all obligations payable to
the Purchaser Groups and the Administrator under the Agreement and under each
Purchaser Group Fee Letter); (ii) the payment of accrued and unpaid interest on
the Company Note; and (iii) other legal and valid corporate purposes.
(p) TANGIBLE NET WORTH. The Seller will not permit its tangible net worth,
at any time, to be less than $3,000,000.
IV-6
(q) CALCULATION OF THE PURCHASED INTEREST. If requested, the Seller shall
calculate the Purchased Interest on a daily basis and, if requested, provide the
results of such calculation to the Administrator, any Purchaser Agent, ▇▇▇▇▇'▇
or Standard & Poor's, as applicable.
2. COVENANTS OF THE SERVICER. Until the latest of the Facility Termination
Date, the date on which no Investment of or Discount in respect of the Purchased
Interest shall be outstanding or the date all other amounts owed by the Seller
under the Agreement to the Purchaser Agents, the Purchasers, the Administrator
and any other Indemnified Party or Affected Person shall be paid in full:
(a) COMPLIANCE WITH LAWS, ETC. The Servicer shall comply in all material
respects with all applicable Legal Requirements, and preserve and maintain its
corporate existence, rights, franchises, qualifications and privileges, except
to the extent that the failure so to comply with such Legal Requirements or the
failure so to preserve and maintain such existence, rights, franchises,
qualifications and privileges would not have a Material Adverse Effect.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT, ETC. The Servicer will maintain
and implement administrative and operating procedures (including an ability to
recreate records evidencing Receivables and related Contracts in the event of
the destruction of the originals thereof), and keep and maintain all documents,
books, records, computer tapes and disks and other information reasonably
necessary or advisable for the collection of all Receivables (including records
adequate to permit the daily identification of each Receivable and all
Collections of and adjustments to each existing Receivable).
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND COLLECTION
POLICY. The Servicer shall, at its expense, timely and fully perform and comply
with all material provisions, covenants and other promises required to be
observed by it under the Contracts or applicable Legal Requirements related to
the Receivables, and timely and fully comply in all material respects with the
Credit and Collection Policy with regard to each Receivable and the related
Contract or applicable Legal Requirements.
(d) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as otherwise required by
applicable Legal Requirements or otherwise permitted under the Agreement, the
Servicer shall not extend the maturity or adjust the Outstanding Balance or
otherwise modify the terms of any Pool Receivable, or amend, modify or waive any
term or condition of any related Contract or waive any right granted to the
Servicer by any applicable Legal Requirements.
(e) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Except as required
by applicable Legal Requirements, the Servicer shall not make any change in the
character of its business or in the Credit and Collection Policy that would have
a material adverse effect on the terms and conditions or the collectibility of a
material portion of the Receivables. The
IV-7
Servicer shall not make any other material change in the Credit and
Collection Policy without giving prior written notice thereof to the
Administrator and each Purchaser Agent.
(f) AUDITS. The Servicer shall, from time to time during regular business
hours, but no more frequently than annually unless (x) a Termination Event or
Unmatured Termination Event has occurred and is continuing or (y) in the opinion
of the Administrator (with the consent or at the direction of the Majority
Purchasers) reasonable grounds for insecurity exist with respect to the
collectibility of a material portion of the Pool Receivables or with respect to
the Servicer's performance or ability to perform in any material respect its
obligations under the Agreement, as reasonably requested in advance (unless a
Termination Event or Unmatured Termination Event exists) by the Administrator,
permit the Administrator, or its agents or representatives: (i) to examine and
make copies of and abstracts from all books, records and documents (including
computer tapes and disks) in its possession or under its control relating to
Receivables and the Related Security, including the related Contracts; and (ii)
to visit its offices and properties for the purpose of examining such materials
described in CLAUSE (i) above, and to discuss matters relating to Receivables
and the Related Security or its performance hereunder or under the Contracts
with any of its officers, employees, agents or contractors having knowledge of
such matters and (iii) without limiting the CLAUSES (i) and (ii) above, to
engage certified public accountants or other auditors acceptable to the Servicer
and the Administrator to conduct at the Servicer's expense, a review of the
Servicer's books and records with respect to the Receivables.
(g) CHANGE IN LOCK-BOX BANKS, LOCK-BOX ACCOUNTS AND PAYMENT INSTRUCTIONS TO
OBLIGORS. The Servicer shall not add or terminate any bank or other entity as a
Lock-Box Bank or any account as a Lock-Box Account from those listed in SCHEDULE
II to the Agreement, make any change to the KU Post Office Box, make any change
in its instructions to Obligors regarding payments to be made to the Seller, the
Servicer, Travelers or any Lock-Box Account (or related post office box or the
KU Post Office Box), make any change in its instructions to Travelers regarding
the handling of Collections or make any changes in its procedures for processing
Collections received in the KU Post Office Box, unless the Administrator and the
Majority Purchasers shall have consented thereto (which consent shall not be
unreasonably withheld, conditioned or delayed) in writing and the Administrator
shall have received copies of all agreements and documents (including Lock-Box
Agreements) that it may request in connection therewith.
(h) DEPOSITS TO LOCK-BOX ACCOUNTS. The Servicer shall: (i) instruct all
Obligors to make payments of all Receivables to one of the following: (A) one or
more Lock-Box Accounts or to post office boxes to which only Lock-Box Banks have
access (and shall instruct the Lock-Box Banks to cause all items and amounts
relating to such Receivables received in such post office boxes to be removed
and deposited into a Lock-Box Account within three Business Days of Traveler's
receipt of such items and amounts), (B) the KU Post Office Box and (C) Travelers
payment centers (and shall instruct Travelers to cause all items and amounts
relating to such Receivables received in such payment centers to be removed and
deposited into a Lock-Box Account on a daily basis); and (ii) deposit, or cause
to be deposited, any Collections received by it, the Seller or the Originator
into Lock-Box
IV-8
Accounts not later than one Business Day after receipt thereof and agrees that
all such Collections shall be deemed to be received in trust for the Purchasers
and shall be set aside and segregated until such transfer. Except as otherwise
agreed to in writing by the Administrator and the Majority Purchasers, 30 days
after the Closing Date, each Lock-Box Account (other than Lock-Box Accounts
maintained at Community Banks) and (within twenty-one (21) days of the
Administrator's written request to the Seller) the KU Post Office Box shall at
all times be subject to, and Travelers shall at all times be a party to, a
Lock-Box Agreement. The Servicer will not deposit or otherwise credit, or cause
or permit to be so deposited or credited, to any Lock-Box Account or the KU Post
Office Box cash or cash proceeds other than Collections.
(i) REPORTING REQUIREMENTS. The Servicer shall provide to the Administrator
(in multiple copies, if requested by the Administrator) and each Purchaser Agent
the following:
(i) as soon as available and in any event not later than two Business
Days prior to the Settlement Date, an Information Package as of the last
day of such month or, within 10 Business Days of a request by the
Administrator or any Purchaser Agent, an Information Package for such
periods as is specified by the Administrator or such Purchaser Agent
(including on a semi-monthly or weekly basis);
(ii) as soon as possible and in any event within five days after
becoming aware of the occurrence of each Termination Event or Unmatured
Termination Event, a statement of the chief financial officer of Servicer
setting forth details of such Termination Event or Unmatured Termination
Event and the action that such Person has taken and proposes to take with
respect thereto;
(iii) promptly after the Servicer obtains knowledge thereof, notice of
any: (A) litigation, investigation or proceeding that may exist at any time
between the Servicer or any of its Subsidiaries and any Governmental
Authority that, if not cured or if adversely determined, as the case may
be, would have a Material Adverse Effect; (B) litigation or proceeding
adversely affecting such Person or any of its Subsidiaries in which the
amount involved is $500,000 or more and not covered by insurance or in
which injunctive or similar relief is sought; or (C) litigation or
proceeding relating to any Transaction Document;
(iv) promptly after the occurrence thereof, notice of a material
adverse change in the business, operations, property or financial or other
condition of Servicer or any of its Subsidiaries;
(v) such other information respecting the Receivables or the condition
or operations, financial or otherwise, of the Servicer as the Administrator
or any Purchaser Agent may from time to time reasonably request;
(vi) promptly after the occurrence thereof, notice of any material
change to any Legal Requirement under which a Receivable arises.
IV-9
3. SEPARATE EXISTENCE. Each of the Seller and Servicer hereby acknowledges
that the Purchasers, the Purchaser Agents, the Administrator and the Liquidity
Providers are entering into the transactions contemplated by this Agreement and
the other Transaction Documents in reliance upon the Seller's identity as a
legal entity separate from Originator and its Affiliates. Therefore, from and
after the date hereof, each of the Seller and Servicer shall take all steps
specifically required by the Agreement or reasonably required by the
Administrator to continue the Seller's identity as a separate legal entity and
to make it apparent to third Persons that the Seller is an entity with assets
and liabilities distinct from those of Originator and any other Person, and is
not a division of Originator, its Affiliates or any other Person. Without
limiting the generality of the foregoing and in addition to and consistent with
the other covenants set forth herein, each of the Seller and Servicer shall take
such actions as shall be required in order that:
(a) The Seller will be a limited purpose entity whose primary
activities are restricted in its limited liability company agreement to:
(i) purchasing or otherwise acquiring from the Originator, owning, holding,
granting security interests or selling interests in Pool Assets, (ii)
entering into agreements for the selling and servicing of the Receivables
Pool, and (iii) conducting such other activities as it deems necessary or
appropriate to carry out its primary activities;
(b) The Seller shall not engage in any business or activity, or incur
any indebtedness or liability, other than as expressly permitted by the
Transaction Documents;
(c) Not less than one member of the Seller's Board of Directors (the
"Independent Director") shall be an individual who is not a direct,
indirect or beneficial stockholder, officer, director, employee or
associate of the Originator or any of its Affiliates or any relative of the
foregoing (other than the Seller and any other bankruptcy remote special
purpose entity formed for the sole purpose of securitizing or facilitating
the securitization of financial assets of any member or members of the
Seller's Parent Group (as defined in the Limited Liability Company
Agreement of the Seller). The limited liability company agreement of the
Seller shall provide that: (i) the Seller's Board of Directors shall not
approve, or take any other action to cause the filing of, a voluntary
bankruptcy petition with respect to the Seller unless the Independent
Director shall approve the taking of such action in writing before the
taking of such action, and (ii) such provision cannot be amended without
the prior written consent of the Independent Director;
(d) The Independent Director shall not at any time serve as a trustee
in bankruptcy for the Seller, the Originator or any Affiliate thereof;
(e) Any employee, consultant or agent of the Seller will be
compensated from the Seller's funds for services provided to the Seller.
The Seller will not engage any agents other than its attorneys, auditors
and other professionals, and a servicer
IV-10
and any other agent contemplated by the Transaction Documents for the
Receivables Pool, which servicer will be fully compensated for its services
by payment of the Servicing Fee;
(f) The Seller will contract with the Servicer to perform for the
Seller all operations required on a daily basis to service the Receivables
Pool. The Seller will pay the Servicer the Servicing Fee pursuant to the
Agreement. Except as contemplated by the next succeeding sentence, the
Seller will not incur any material indirect or overhead expenses for items
shared with the Originator (or any other Affiliate thereof) that are not
reflected in the Servicing Fee. To the extent, if any, that the Seller and
the Originator (or any Affiliate thereof) share items of expenses not
reflected in the Servicing Fee, such as legal, auditing and other
professional services, such expenses will be allocated to the extent
practical on the basis of actual use or the value of services rendered, and
otherwise on a basis reasonably related to the actual use or the value of
services rendered; it being understood that Originator shall pay all
expenses relating to the preparation, negotiation, execution and delivery
of the Transaction Documents, including legal, agency and other fees;
(g) The Seller's operating expenses will not be paid by Originator or
any other Affiliate thereof;
(h) All of the Seller's business correspondence and other
communications shall be conducted in the Seller's own name and on its own
separate stationery;
(i) The Seller's books and records will be maintained separately from
those of the Originator and any other Affiliate thereof;
(j) All financial statements of the Originator or any Affiliate
thereof that are consolidated to include Seller will contain detailed notes
clearly stating that: (i) a special purpose corporation exists as a
Subsidiary of the Originator, and (ii) the Originator has sold receivables
and other related assets to such special purpose Subsidiary that, in turn,
has sold undivided interests therein to certain financial institutions and
other entities;
(k) The Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of the
Originator or any Affiliate thereof;
(l) The Seller will strictly observe organizational formalities in its
dealings with the Originator or any Affiliate thereof, and funds or other
assets of the Seller will not be commingled with those of the Originator or
any Affiliate thereof except as permitted by the Agreement in connection
with servicing the Pool Receivables. The Seller shall not maintain joint
bank accounts or other depository accounts to which the Originator or any
Affiliate thereof (other than in the capacity of Servicer or Sub-Servicer)
has independent access. The Seller is not named, and has not entered into
any agreement to be named, directly or indirectly, as a direct or
IV-11
contingent beneficiary or loss payee on any insurance policy with
respect to any loss relating to the property of the Originator or any
Subsidiary or other Affiliate of the Originator. The Seller will pay to the
appropriate Affiliate the marginal increase or, in the absence of such
increase, the market amount of its portion of the premium payable with
respect to any insurance policy that covers the Seller and such Affiliate;
and
(m) The Seller will maintain arm's-length relationships with the
Originator (and any Affiliate thereof). Any Person that renders or
otherwise furnishes services to the Seller will be compensated by the
Seller at market rates for such services it renders or otherwise furnishes
to the Seller. Neither the Seller nor the Originator will be or will hold
itself out to be responsible for the debts of the other or the decisions or
actions respecting the daily business and affairs of the other. The Seller
and the Originator will immediately correct any known misrepresentation
with respect to the foregoing, and they will not operate or purport to
operate as an integrated single economic unit with respect to each other or
in their dealing with any other entity.
IV-12
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
(a) (i) the Seller, the Originator or the Servicer shall fail to perform or
observe any term, covenant or agreement under the Agreement or any other
Transaction Document and, except as otherwise provided herein, such failure
shall continue for seven (7) Business Days after knowledge or notice thereof,
(ii) the Seller or the Servicer shall fail to make when due any payment or
deposit to be made by it under the Agreement and such failure shall continue
unremedied for two (2) Business Days or (iii) KU shall resign as Servicer, and
no successor Servicer reasonably satisfactory to the Administrator and the
Majority Purchasers shall have been appointed;
(b) KU (or any Affiliate thereof) shall fail to transfer to any successor
Servicer when required any rights pursuant to the Agreement that KU (or such
Affiliate) then has as Servicer;
(c) any representation or warranty made or deemed made by the Seller or the
Originator (or any of their respective officers) under or in connection with the
Agreement or any other Transaction Document, or any information or report
delivered by the Seller, the Originator or the Servicer pursuant to the
Agreement or any other Transaction Document, shall prove to have been incorrect
or untrue in any material respect when made or deemed made or delivered, and
shall remain incorrect or untrue for Seven (7) Business Days after notice to the
Seller or the Servicer of such inaccuracy;
(d) the Seller or the Servicer shall fail to deliver the Information
Package pursuant to the Agreement, and such failure shall remain unremedied for
two Business Days;
(e) the Agreement or any purchase or reinvestment pursuant to the Agreement
shall for any reason: (i) cease to create, or the Purchased Interest shall for
any reason cease to be, a valid and enforceable perfected undivided percentage
ownership or security interest to the extent of the Purchased Interest in each
Pool Receivable, the Related Security and Collections with respect thereto, free
and clear of any Adverse Claim, or (ii) cease to create with respect to the Pool
Assets, or the interest of the Administrator (for the benefit of the Purchasers)
with respect to such Pool Assets shall cease to be, a valid and enforceable
first priority perfected security interest, free and clear of any Adverse Claim;
(f) the Seller or the Originator shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Seller or the Originator
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy, insolvency
or
V-1
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 60 days, or
any of the actions sought in such proceeding (including the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its property)
shall occur; or the Seller or the Originator shall take any organizational or
corporate, as applicable, action to authorize any of the actions set forth above
in this paragraph;
(g) (i) the (A) Default Ratio shall exceed 3%, (B) Delinquency Ratio shall
exceed 5%, (C) Day Sales Outstanding shall exceed 30, or (ii) the average for
three consecutive calendar months of: the (A) Default Ratio shall exceed 2%, or
(B) the Delinquency Ratio shall exceed 3%;
(h) a Change in Control shall occur;
(i) at any time (i) the sum of (A) the Aggregate Investment plus (B) the
Total Reserves, exceeds (ii) the sum of (A) the Net Receivables Pool Balance at
such time plus (B) the Purchasers' share of the amount of Collections then on
deposit in the Lock-Box Accounts (other than amounts set aside therein
representing Discount and Fees), and such circumstance shall not have been cured
within two Business Days;
(j) (i) the Originator or any of its Significant Subsidiaries shall fail to
pay any principal of or premium or interest on any of its Debt that is
outstanding in a principal amount of at least $25,000,000 in the aggregate when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement, mortgage,
indenture or instrument relating to such Debt (and shall have not been waived);
or (ii) any other event shall occur or condition shall exist under any
agreement, mortgage, indenture or instrument relating to any such Debt and shall
continue after the applicable grace period, if any, specified in such agreement,
mortgage, indenture or instrument (and shall have not been waived), if, in
either case: (a) the effect of such non-payment, event or condition is to give
the applicable debtholders the right (whether acted upon or not) to accelerate
the maturity of such Debt, or (b) any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to repay, redeem,
purchase or defease such Debt shall be required to be made, in each case before
the stated maturity thereof;
(k) either: (i) a contribution failure shall occur with respect to any
Benefit Plan sufficient to give rise to a lien under Section 302(f) of ERISA,
(ii) the Internal Revenue Service shall file a notice of lien asserting a claim
or claims of $250,000 or more in the aggregate pursuant to the Internal Revenue
Code with regard to any of the assets of Seller, the Originator, or any ERISA
Affiliate and such lien shall have been filed and not released
V-2
within 10 days, or (iii) the Pension Benefit Guaranty Corporation shall, or
shall indicate its intention in writing to the Seller, the Originator, or any
ERISA Affiliate to, either file a notice of lien asserting a claim pursuant to
ERISA with regard to any assets of the Seller, the Originator or any ERISA
Affiliate or terminate any Benefit Plan that has unfunded benefit liabilities,
or any steps shall have been taken to terminate any Benefit Plan subject to
Title IV of ERISA so as to result in any liability in excess of $1,000,000 and
such lien shall have been filed and not released within 10 days;
(l) one or more final judgments for the payment of money shall be entered
against the Seller or (ii) one or more final judgments for the payment of money
in an amount in excess of $25,000,000, individually or in the aggregate, shall
be entered against the Originator on claims not covered by insurance or as to
which the insurance carrier has denied its responsibility, and such judgment
shall continue unsatisfied and in effect for sixty (60) consecutive days without
a stay of execution; or
(m) the "Purchase and Sale Termination Date" under and as defined in the
Sale Agreement shall occur under the Sale Agreement or the Originator shall for
any reason cease to transfer, or cease to have the legal capacity to transfer,
or otherwise be incapable of transferring Receivables to the Seller under the
Sale Agreement.
(n) There shall have occurred any event that would, with the giving of
notice or the passing of time, or both, have an effect of the type described in
clauses (b) through (e) of the definition of Material Adverse Effect.
(o) Any Lock-Box Account (other than a Lock-Box Account maintained at a
Community Bank) shall not be subject to, or Travelers shall not be a party to, a
Lock-Box Agreement after the 30th day after the Closing Date.
(p) The Seller shall fail to pay any Increased Costs (or amounts that would
have been due but for the operation of SECTION 1.8(b)) when due (or when such
amounts would have been due but for the operation of SECTION 1.8(b)).
V-3
SCHEDULE I
CREDIT AND COLLECTION POLICY
[ON FILE WITH THE ADMINISTRATOR]
SCHEDULE I-1
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
Note that all Lock-Box Banks listed on this Schedule II that are not marked with
an asterix immediately following their name are "Community ▇▇▇▇▇."
Travelers Express Company, Inc.*
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
First Commonwealth Bank*
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇▇
Community Trust Bank*
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇▇▇▇
PNC Bank, Madison County*
P.O. Box 8
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: 3190836143
PNC Bank*
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: 3009341163
Bank One, NA*
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇
260220037
Citizens State Bank*
▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇
SCHEDULE II-1
COMMUNITY BANKS:
Fifth Third Bank
P.O. Drawer K
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: 5370011465
Area Bank
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: 0028301978
Old National Bank
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇▇
Fifth Third Bank
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇▇▇▇
National City Bank
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: 736600578
Citizens Bank & Trust Company
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇
First National Bank
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: 013846
Citizens Union Bank
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇
Farmers Bank & Trust Company
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇
SCHEDULE II-2
United Bank & Trust Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇
Mt. Sterling National Bank
▇.▇. ▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: 015245
Citizens Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇
Kentucky Bank
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: 032611
Security Bank
▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇
First National Bank
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: 388084
Peoples Commercial Bank
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇▇
Cumberland Valley National
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇
First Street Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: 0000001589
SCHEDULE II-3
Bank of Harlan
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: 100616200
Citizens National Bank
▇.▇. ▇▇▇ ▇▇▇
107 East Mt. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇▇
▇▇▇ Bank and Trust Company
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Account Number: ▇▇▇▇▇▇▇
SCHEDULE II-4
SCHEDULE III
TRADE NAMES
1) Old Dominion Power Company
SCHEDULE III-1
ANNEX A
TO
RECEIVABLES PURCHASE AGREEMENT
FORM OF INFORMATION PACKAGE
[ON FILE WITH THE ADMINISTRATOR]
ANNEX A-1
ANNEX B
TO
RECEIVABLES PURCHASE AGREEMENT
FORM OF PURCHASE NOTICE
PNC Bank, National Association
One PNC Plaza, 3rd Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Reference is hereby made to the
Receivables Purchase Agreement, dated as of
February 6, 2001 (as heretofore amended or supplemented, the "
RECEIVABLES
PURCHASE AGREEMENT"), among KU Receivables LLC ("SELLER"), Kentucky Utilities
Company, as Servicer, Market Street Funding Corporation, as a Conduit Purchaser
and as Related Committed Purchaser, Three Rivers Funding Corporation, as a
Conduit Purchaser and as a Related Committed Purchaser, Mellon Bank, N.A. as a
Purchaser Agent, the various other Purchaser Groups from time to time a party
thereto and PNC Bank National Association, as a Purchaser Agent and as
administrator (in the latter capacity, the "ADMINISTRATOR"). Capitalized terms
used in this Purchase Notice and not otherwise defined herein shall have the
meanings assigned thereto in the
Receivables Purchase Agreement.
This letter constitutes a Purchase Notice pursuant to SECTION 1.2(a) of the
Receivables Purchase Agreement. Seller desires to sell an undivided variable
interest in a pool of receivables on [___,__] 2001, for a purchase price of
$____________. Subsequent to this Purchase, the Aggregate Investment will be
$___________.
Seller hereby represents and warrants as of the date hereof, and as of the
date of Purchase, as follows:
(i) the representations and warranties contained in EXHIBIT III of the
Receivables Purchase Agreement are correct on and as of such dates as though
made on and as of such dates and shall be deemed to have been made on such dates
except to the extent it specifically relates to a prior date;
(ii) no Termination Event or Unmatured Termination Event has occurred and
is continuing, or would result from such purchase;
(iii) after giving effect to the purchase proposed hereby, the Aggregate
Investment of the Purchased Interest will not exceed 100% and the Aggregate
Investment will not exceed the Purchase Limit; and
ANNEX B-1
(iv) the Facility Termination Date shall not have occurred with respect to
all Purchasers.
IN WITNESS WHEREOF, the undersigned has caused this Purchase Notice to be
executed by its duly authorized officer as of the date first above written.
KU RECEIVABLES LLC
By:
--------------------------------
Name Printed:
----------------------
Title:
-----------------------------
ANNEX B-2
ANNEX C
TO
RECEIVABLES PURCHASE AGREEMENT
LIST OF EXCLUDED OBLIGORS
[NONE]
ANNEX C-1
ANNEX D
TO RECEIVABLES PURCHASE AGREEMENT
FORM OF ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (this "AGREEMENT"), dated as of [ ] ____, 20[ ],
is among KU RECEIVABLES LLC (the "Seller"), [________], as purchaser (the "
[_____] Conduit Purchaser"), [________], as the related committed purchaser (the
"[______] Related Committed Purchaser" and together with the Conduit Purchaser,
the "[_____] Purchasers"), and [________], as agent for the Purchasers (the
"[______] Purchaser Agent" and together with the Purchasers, the "[_______]
Purchaser Group").
BACKGROUND
The Seller and various others are parties to a certain Receivables Purchase
Agreement dated as of February 6, 2001 (as amended through the date hereof, the
"Receivables Purchase Agreement"). Capitalized terms used and not otherwise
defined herein have the respective meaning assigned to such terms in the
Receivables Purchase Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. This letter constitutes an Assumption Agreement pursuant to
SECTION 1.2(e) of the Receivables Purchase Agreement. The Seller desires [the
[_____] Purchasers and the [______] Purchaser Agent] [the [ ] Related Committed
Purchaser] to [become a party to] [increase its existing Commitment under] the
Receivables Purchase Agreement and upon the terms and subject to the conditions
set forth in the Receivables Purchase Agreement, [the [________] Purchasers
agree to become Purchasers thereunder, and the [ ] Purchaser Agent agrees to
become a Purchaser Agent thereunder and] the [_____] Related Committed Purchaser
agrees to [a new] [increase its] Commitment in an amount equal to the amount set
forth as the "Commitment" under its signature hereto.
Seller hereby represents and warrants to the [________] Purchasers as of
the date hereof, as follows:
(i) the representations and warranties contained in EXHIBIT III of the
Receivables Purchase Agreement are correct on and as of such dates as though
made on and as of such dates and shall be deemed to have been made on such
dates, except to the extent it specifically relates to a prior date;
ANNEX D-1
(ii) no Termination Event or Unmatured Termination Event has occurred and
is continuing, or would result from such purchase; and
(iii) the Facility Termination Date shall not have occurred.
SECTION 2. Upon execution and delivery of this Assumption Agreement by the
Seller and each member of the [______] Purchaser Group, satisfaction of the
other conditions to assignment specified in SECTION 1.2(e) of the Receivables
Purchase Agreement (including the consent of the Administrator and each of the
other Purchasers party thereto) and receipt by the Administrator of counterparts
of this Agreement (whether by facsimile or otherwise) executed by each of the
parties hereto, [the [_____] Purchasers and the [______] Purchaser Agent shall
become a party to, and have the rights and obligations of Purchasers or a
Purchaser Agent (as appropriate) under, the Receivables Purchase Agreement and]
the [______] Related Committed Purchaser shall [have a] [increase its]
Commitment in the amount set forth as the "Commitment" under the signature of
the [______] Related Committed Purchaser, hereto.
SECTION 3. Each party hereto hereby covenants and agrees that it will not
institute against, or join any other Person in instituting against, any Conduit
Purchaser, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, or other proceeding under any federal or state
bankruptcy or similar law, for one year and one day after the latest maturing
Notes issued by such Conduit Purchaser is paid in full. The covenant contained
in this paragraph shall survive any termination of the Receivables Purchase
Agreement.
SECTION 4. THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK. This Agreement may not be amended, supplemented or waived
except pursuant to a writing signed by the party to be charged. This Agreement
may be executed in counterparts, and by the different parties on different
counterparts, each of which shall constitute an original, but all together shall
constitute one and the same agreement.
(continued on following pages)
ANNEX D-2
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the date first above written.
[___________], as a Conduit Purchaser
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
[Address]
[___________], as a Related Committed Purchaser
By:
--------------------------------------------
Name Printed:
----------------------------------
Title:
-----------------------------------------
[Address]
[Commitment]
[___________], as Purchaser Agent for [_______]
By:
-------------------------------------------
Name Printed:
---------------------------------
Title:
----------------------------------------
[Address]
ANNEX D-3
KU RECEIVABLES LLC, as Seller
By:
-------------------------------------------
Name Printed:
---------------------------------
Title:
----------------------------------------
Consented and Agreed:
PNC BANK, NATIONAL ASSOCIATION,
as Administrator
By:
-------------------------------------------
Name Printed:
---------------------------------
Title:
----------------------------------------
Consented and Agreed:
[THE PURCHASERS]
ANNEX D-4
ANNEX E
TO RECEIVABLES PURCHASE AGREEMENT
FORM OF TRANSFER SUPPLEMENT
WITH RESPECT TO
KU RECEIVABLES, LLC
RECEIVABLES PURCHASE AGREEMENT
[ ] ____, 20[ ]
SECTION 1.
[Commitment assigned: $_________
Assignor's remaining Commitment: $_________
Investment allocable to Commitment assigned:](1/)- $_________
Investment assigned:
Discount (if any) allocable to Investment
assigned: $
Discount (if any) allocable to Assignor's
remaining Investment: $_________
SECTION 2.
Effective Date of this Transfer Supplement: [ ] _____, 20[ ]
Upon execution and delivery of this Transfer Supplement by transferee and
transferor and the satisfaction of the other conditions to assignment specified
in [SECTION 6.3(c)] [SECTION 6.3(e)]of the Receivables Purchase Agreement, from
and after the effective date specified above, the transferee shall become a
party to, and have the rights and obligations of a [Conduit Purchaser] [Related
Committed Purchaser] under, the Receivables Purchase Agreement dated as of
February 6, 2001 (as amended through the date hereof, the Receivables Purchase
Agreement), among KU RECEIVABLES LLC, KENTUCKY UTILITIES COMPANY and various
other parties.
----------
(1/) Bracketed language is only applicable to assignments by Related
Committed Purchasers pursuant to SECTION 6.3(C).
ANNEX E-1
ASSIGNOR: [____________], as a [Related
Committed Purchaser for
[___________]] [Conduit Purchaser]
By:
--------------------------------------------
Name Printed:
----------------------------------
Title:
-----------------------------------------
ASSIGNEE: [______________], as a [Related
Committed Purchaser for
[______________]] [Conduit Purchaser]
By:
--------------------------------------------
Name Printed:
----------------------------------
Title:
-----------------------------------------
[Address]
[Commitment Assigned]1/
Accepted as of date first above
written:
[______________],
as Purchaser Agent for the
[________] Purchaser Group
By:
-------------------------------------------
Name Printed:
---------------------------------
Title:
----------------------------------------
--------
(2/) Bracketed language is only applicable to assignments by Related Committed
Purchasers pursuant to SECTION 6.3(c).
ANNEX E-2